Amendment to change timing of distribution - permissible?

[Lynn Campbell]

Plan amended in 1995 for TRA 86 etc. Prior to the 1995 amendment, all terminated EEs were paid after a year had elapsed following termination. No language in the Plan to this effect, the Plan allowed employer discretion, and a pattern was established. The 1995 amendment(inadvertently) liberalized timing to specify that a terminated EE would be paid "as soon as administratively feasible" after the end of the Plan Year following termination. No one has terminated since 1989. Now an HCE has terminated abruptly just before the end of the Plan Year, and the owner wants to pay him in 1 year. (terminee is owner's son). Is there any legitimate way to do this?

[Guest dlm]

I am not sure i am reading your post correctly. Are you saying that you want to make the owner's son wait longer than as soon as practicable after end of plan year. If this is what you are saying, then i think no, you cant do that. Timing of distributions is a protected benefit under 411(d)(6).

BUT, if you are saying that you want to pay the owner's son out quicker than usual, then "in theory", i think you will need to test for current and effective availability under 401(a)(4). I would be hesitant to change distribution policy to be more lenient for an HCE.