Dumb Question about mandatory distribution?

A terminated participant has a vested account balance of less than $1,000.

Per the terms of the plan will make a mandatory distribution of account balances that are $1,000 or less. The distribution will be made as soon as administratively feasible.

The vested amount is >$200, must the participant sign an election form?

The document may be more employee-friendly, but under the law I believe that all you need to do is to give the participant the option of a direct rollover within the time frame specified by the regulations, but absent such an election you can send the participant a check minus 20% FIT withholding.  I am going on memory so hopefully someone will correct me if I am wrong.

If participants distributions for the year are less than $200, the plan does not have to provide a direct rollover option and is not required to withhold.  Just pay out and 1099.

Notice 2018-74

">" means greater than

Send the distribution package out to the participant.  If s/he does not respond by the date specified, you can cut them a check for the gross amount minus withholding.  The key is that you must give them an opportunity to select a distribution option (where there is an option) prior to the auto cash out/auto rollover.

On 4/1/2019 at 5:17 PM, Doghouse said:

">" means greater than

I need IV coffee sometimes...

13 hours ago, RatherBeGolfing said:

I need IV coffee sometimes...

4 coffees is a lot!

Especially when you prefer Cuban coffee like me :|

Or did you mean IV, as in IntraVenus?

I did, but I assume it was a roman numeral pun on BGs behalf.  4 Cuban coffees might as well be an IV though ha ha

jpod is correct. You must provide the participant with a 402(f) notice. If the participant makes no election for a direct rollover, then you can either make a distribution (and withhold 20%) or the plan can do a direct rollover to an IRA. It depends on the plan terms - and if the plan is silent, then it's a procedural issue as to which way to go. Many find that cutting the check is a problem because you can't force someone to cash a check.