Deferred Vested Benefit (401k plan)

[legort69]

Why is this not the definition for a deferred vested benefit in a 401k plan?

If you terminate employment and you have a vested retirement benefit that you are not eligible to receive until later, that information will be reported by your plan to the Internal Revenue Service, which, in turn, will inform the Social Security Administration (SSA). This information must also be provided to you by the plan. The Social Security Administration will tell you, upon request, whether you were reported as having a deferred vested benefit under any plan.

Why report a person on a form if they choose to keep their funds in a participant-directed 401k account, receive quarterly statements, has access to real-time balances on the website, and do not have to wait until retirement date in order to take a distribution?

[RatherBeGolfing]

19 minutes ago, legort69 said:

Why is this not the definition for a deferred vested benefit in a 401k plan?

If you terminate employment and you have a vested retirement benefit that you are not eligible to receive until later, that information will be reported by your plan to the Internal Revenue Service, which, in turn, will inform the Social Security Administration (SSA). This information must also be provided to you by the plan. The Social Security Administration will tell you, upon request, whether you were reported as having a deferred vested benefit under any plan.

Because that is not the purpose of the form...

[CuseFan]

Probably so the rules are uniform across plan types, and also not all defined contribution plans are participants directed quarterly statement varieties. 

[Larry Starr]

15 hours ago, legort69 said:

Why is this not the definition for a deferred vested benefit in a 401k plan?

If you terminate employment and you have a vested retirement benefit that you are not eligible to receive until later, that information will be reported by your plan to the Internal Revenue Service, which, in turn, will inform the Social Security Administration (SSA). This information must also be provided to you by the plan. The Social Security Administration will tell you, upon request, whether you were reported as having a deferred vested benefit under any plan.

Why report a person on a form if they choose to keep their funds in a participant-directed 401k account, receive quarterly statements, has access to real-time balances on the website, and do not have to wait until retirement date in order to take a distribution?

The real answer is "because that's the law".  If you thought your suggestion was a good idea, suggest it to congress or to your organization's government affairs group.  I would guess that in our (ASPPA) govt affairs committee (where I am a Senior Advisor), we would not be willing to take that up as a suggestion for myriad reasons, some of which were noted in other responses.

 

[legort69]

Then they should change the name to Vested Benefit. 

[RatherBeGolfing]

30 minutes ago, legort69 said:

Then they should change the name to Vested Benefit. 

https://www.irs.gov/forms-pubs/comment-on-tax-forms-and-publications

This would be the more appropriate forum...

[Larry Starr]

4 hours ago, legort69 said:

Then they should change the name to Vested Benefit. 

WHO should change the name of WHAT?  Your question has been answered appropriately; what are you saying now and who are you arguing with?

[legort69]

I was just thinking aloud that it sounds like a deferred vested benefit has the same meaning as a vested benefit for terminated participants.

I wasn't arguing with anyone.

[Larry Starr]

3 minutes ago, legort69 said:

I was just thinking aloud that it sounds like a deferred vested benefit has the same meaning as a vested benefit for terminated participants.

I wasn't arguing with anyone.

OK; let's say that the term "vested benefit" really does incorporate by reference (at least) the idea of a DEFERRED benefit (and I think that is probably true in most situations of use of that term).  The question then is "so what"? Is there an issue with that concept? If there is, what is it?