force out distribution immediately upon separation of service

[Santo Gold]

Do employees with balances under $5,000 have to be given distribution options or can they simply be forced out?  One of my plan sponsors wants to go hyper-streamlining in the distribution process and the day that an individual terminates employment, if they have under $5,000, send them a check and inform them they have 60 days to do something with it.  Assuming only lump sum distributions are permitted, could they do this?  Doesn't the plan sponsor at least have to give them their options and maybe a 30 day window to decide before taking the force out route?  Plus, if over $1,000, the only force out option is an IRA.

 

Thanks

[Lou S.]

You have to give them an option and 402(f) notice at least 30 and no more than 90 days before forcing a distribution is my understanding.

[CuseFan]

Lou is correct - they must get at least 30 days to elect direct distribution with taxes withheld or a direct rollover.

[Bri]

I would think it's 180 days on the high end for 402f purposes these days, no?

[John Feldt ERPA CPC QPA]

My understanding is that only if it’s under $200 that you can just give them the check and the 402(f) notice with no advance period or election.