Break in Service: Prohibit Lump Sum Cashout?

[Guest RW]

Pension equity plan permits lump sum distributions at termination. EE terminates and is rehired within 60 days, but before EE receives lump sum cashout (more than $5,000). May plan be amended to restrict cash outs if EE returns to employment within a certain number of days, and no distribution occurred?

[Guest]

Why wouldn't this change be the elimination of an optional form of benefit -- the right to get a lump sum upon a bona fide termination of employment? The new condition that the lump sum is only available if you stay terminated for at least 60 days seems to be a cutback.

[Guest]

Picking up on Harry O's comment.

The real issue could be was there a bona fide termination, or was this designed to create a cash out for the individual?

That would be a factual determination for the Plan Administrator.

Further, why doesn't the plan have a break in service requirement?