In-Service Distributions - Related Rollover from a DB Plan

[Towanda]

An employer who has both a DB Plan and a 401(k) Plan is terminating the DB plan.  Under the terms of the DB plan, a participant isn't eligible for an in-service distribution until attaining age 62.

Some participants are electing to roll their DB proceeds into the 401(k) Plan.  We know that some features of the DB assets will be retained when rolled into the 401(k) Plan.  Does that also include the in-service provision if the 401(k) plan otherwise permits employees to take in-service distributions at age 59 1/2?

Thank you!

[Bird]

If the plan is terminating, and participants are making these elections to roll into the 401(k), then the in-service rule in the DB is irrelevant, and further, none of the DB distribution restrictions or characteristics follow through to the 401(k).  If the 401(k) permits in-service at 59 1/2 then that is what applies (and some plans allow rollover money to be withdrawn at any time; that would apply as well).

[Towanda]

So, are you also saying that essentially these are not related rollovers . . . ?

[chc93]

The are related rollovers for top-heavy determination purposes (plans of the same employer).  But as Bird says, they are like any other rollover into the 401k plan where any "feature" of the rollover money is not retained.

[Towanda]

Thank you!