1 day termination

A participant left employment for 1 day and was then rehired and is currently employed.  She wants to take her money out of the 401k  plan due to her being unemployed for that 1 day.  She cannot take it though because she is now employed again, correct?  No other in service withdrawal options would apply.

Thanks 

Correct.

Could the participant have a legit argument that the plan document states that distributions can be made upon termination of employment.  She did have a termination of employment.  She was rehired, but in the SPD there is no mention of what happens if you are rehired.   Therefore, since she did have a termination of employment, she had a distributable event and should be paid out?

https://retirementlc.com/sham-termination-of-employment-and-distributions/   Might depend on the circumstances of the termination and rehire....

That is interesting.  The odd thing about what was referenced and this case is that this is a NHCE and there was no deception on the plan sponsor's part regarding the termination.  Its possible that the employee quit and was counting on being rehired, in part to get her benefit.  That would seem like a "sham termination" but the plan sponsor had no part in it.

Also, plan documents often provide that distributions to terminated participants would be done as soon as administratively feasible.  Usually past practice will be looked at for reasonableness, and I don't think the next day after termination is reasonable.  If the terminated employee is rehired before an administratively feasible time period, then I think he is out of luck.

Google "sham termination".  It is edifying.

4 hours ago, EPCRSGuru said:

Google "sham termination".  It is edifying.

In addition, search "sham termination" on these Message Boards.

A real termination could be offered to clear up the confusion.