Valid signature & elections on second distribution

[Guest Phil L]

If a participant completes all the paperwork to receive a distribution such that he/she elects a specific form of beneift (single sum, installments, etc.), tax withholding, and whether to make a direct rollover, what options does the plan sponsor have if the participant receives another contribution at the end of the year? Can the plan sponsor rely on the written election that pertain to the previous distribution even if those signatures and elections are more than 90 days old?

[Kirk Maldonado]

What does the plan say regarding subsequent contributions?

[Guest Phil L]

Like almost all prototype plans, the plan document is sufficiently vague. It has all the required language that gives the participant the right to consider the rollover election in 401(a)(31), etc. The real question is whether the IRS has ever suggested or allowed the payment of a trailing contribution to be made pursuant to "old" elections and signatures (more than 90 days old).

[KJohnson]

I think for QJSA's this is adressed in the 401(a)-20 regs regarding when new consent is required. You might want to look at this thread:

http://benefitslink.com/boards/index.php?showtopic=4470

I work with several plans that have these two-step distributions and have always required new paperwork for the second distribution.