Terminated Participant who wants to keep $$ in Plan

[Pammie57]

The participant has terminated her employment with the company.  The company l maintains a 401k Plan and she has a balance....  However, they just terminated a cash balance plan apparently, and she wants to roll her cash balance money into the 401k Plan.   As I said, she is terminated.  Her balance is less than $5000 in the 401k and can be rolled over to an IRA without her consent I believe.  She wants to move her cash balance money into the 401k - which would put it over $5000.    Her goal is to leave it all in the 401k Plan.  I have no idea why.  

My opinion, and would love some feedback:  Since she is terminated, she cannot roll any money into the plan.    Even though the plans are with the same company - they are separately  treated for distribution purposes.  She needs to open an IRA and roll her 401k into it.  Thoughts??  Can she co-mingle the cash balance money with her 401k money in a rollover IRA without issue?

Thanks!  

[Kevin C]

What does the plan say?  Our current VS 401(k) document has a box to check in the adoption agreement to indicate that the plan will not accept rollover contributions from "former Employees". If the box isn't checked, they can roll in.  Our prior documents  only allowed Employees to roll in.  The plan document will tell you if she can roll the cash balance distribution into the 401(k).  If the plan provisions are not clear, the document should give the Plan Administrator the authority to interpret the plan document.

If she can roll it in, does the 401(k) document include or exclude rollover balances when determining if someone is under the cashout limit? The terms of the plan will determine whether or not her balance(s) can stay in the plan(s).

I can't think of any problem with combining both distributions in the same IRA.

[QDROphile]

It is possible that a special opportunity for rollover from the terminating cash balance to the 401(k) plan was afforded to cash balance  plan participants.  That may have involved an amendment of the 401(k) that does not show up in the obvious 401(k) plan “document”.

[Patricia Neal Jensen]

As stated above, the answer is in the plan document.

[Pammie57]

Thanks all.  The box checked is "any eligible employee...."     the "former employees" box is unchecked so I'm going with No a terminated participant cannot roll money in.