In Service Distribution of the DC component of a DB Plan

[Pxhesq]

Client has a DB plan that has a DC component where certain participants have plan accounts. I am trying to figure out if it is possible for those participants to receive an in service distribution of DC component. Would this be prohibited since the DC is a component of an overall DB plan? 

Thank you for any clarification you can provide. 

[Larry Starr]

Let's say the DB plan allowed for rollovers into the plan by the participant from their prior employers, and those assets were held as separate accounts.  It is allowable for the plan to provide for inservice distributions to be available for those assets, and at any time if that is what is desired.  I think that answers your question, but let us know.

Larry.

[Mike Preston]

I doubt it answers his question because the question is so weakly formed.  What in heavens name is a component in this context?  It can be too many things.  Floor/offset?  DB/DC general tested plan? Rollovers?   You hit the last one but there are even more.

[Pxhesq]

Sorry I'll try to make it more clear as best I can, but basically the DB plan used to have a DC feature in it whereby certain participants could contribute to separate accounts. Those accounts and that DC feature have been frozen, and now the client wants to pay the frozen accounts out and get rid of the DC feature through a lump sum in service distribution. The issue, as I understand it, is that generally this cant be done in a DB plan.

Sec. 414(k) specifies that a DB plan which provides a benefit derived from employer contributions that is based partly on the balance of the separate account of a participant will be treated as a DC plan to the extent benefits are based on the separate account of a participant and as a DB plan with respect to the remaining portion of the benefits under the plan.

Again thank you for your help.

[david rigby]

Does this plan file 2 different 5500s?

[C. B. Zeller]

If this is a 414(k) arrangement, e.g. voluntary after-tax employee contributions in separate accounts in a DB plan, then "Rev. Rul. 69-277 provides that a pension plan may permit distribution to an employee of amounts attributable to the employee's after-tax contributions prior to the employee's termination of employment." (as cited in rev rul 2004-12)

The only other situation I can think of that allows DC contributions in a DB plan is the rare and elusive 414(x), a.k.a. DB-k plan. If you have one of those, then I think 401(k) rules apply.