Cashout when rollovers are involved

[BG5150]

Plan doc excludes rollovers when determining the cashout balance.

Participant has $550 PS (100% vested) and $45,000 Rollover.

Because R/O is excluded, this participant is a candidate to be cashed out.

Does the trustee just cash out the entire account and withhold $9,100?

Or do they roll over the balance to an IRA?  (The plan's threshold for IRA rollovers is $1,000)

[C. B. Zeller]

Roll it over to an IRA. From Notice 2005-05:

Quote

Q-14. Are amounts attributable to rollover contributions that exceed $5,000 subject to the automatic rollover provisions of § 401(a)(31)(B)?

A-14. Yes. Section 401(a)(31)(B) applies to the entire amount of a mandatory distribution. Thus, for example, the portion of the distribution attributable to a
rollover contribution is subject to the automatic rollover requirements of §401(a)(31)(B), even if that amount is excludable (under § 411(a)(11)(D)) from the
determination of whether the present value of the nonforfeitable accrued benefit exceeds $5,000.