Increasing the 5k to 7k for immediate distribution

Hi

A terminated DB plan participant has 6K coming to him.

Current plan states 5k for immediate pay out.

Under the law, one can increase the limit to 7K without an amendment so if this is true, can pay the participant without the spousal consent.

This would be done after the participant terminated.

What am I missing here? Something smells.

That you do need a conforming amendment to adopt the $7K limit by the earlier of plan termination or the end of the remedial amendment period whichever comes first. But otherwise I don't see an issue.

Lou is correct - and to clarify the amendment must be adopted by 12/31/2026 (extended from 12/31/2025) or the plan's termination if earlier.

This is not a plan amendment, simply a terminated participant.

Nothing smelly, though. 

The plan will retroactively be amended so that currently your guy can get the 6K upon his termination of employment without the need for either the annuity options or spousal consent.

On 8/15/2024 at 2:53 PM, Jakyasar said:

This is not a plan amendment, simply a terminated participant.

Currently, yes, but you ultimately need a plan amendment to change the cash out threshold from $5,000 to $7,000 (and with a 1/1/2024 effective date) to do this - it's not an automatic the law says we must, it's an option the law allows the plan to say.

Thank you