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Posted

I trying to get a sense of how long employers are prohibiting the re-hire of employees who have a 401k account and are under age 59 1/2 to support there is a true termination of employment versus a sham termination.  I have seen time periods that range from 3 months to 6 months and less often 12 months.  For this purpose, assume there is no pre-termination agreement between the employer and employee to re-hire.  Thanks!

Posted

Lou S. thanks.  Agree it is ultimately a facts and circumstances, but I do have a number of clients that have policies that start with a general rule no re-hire during X period (unless age 59 1/2 and the plan premittes in-service withdrawals so it is not (arguably) an issue if the termination is extremely short).

  • 1 month later...
Posted

Dare, thanks ... very helpful to hear what others are doing.  As you noted the concern is a sham termination by a participant who is not eliglble for an in-service distribution.  I know many employers have the rule and then exceptions can be made when the facts are clear there was a termination - for example, a RIF where severance was paid. Again, thanks. 

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