Can a Terminated Participant Request CRD?

A Terminated Participant would like to request a CRD in lieu of the Terminated Participant Distribution, I suppose to waive tax withholding.  The Plan permits CRDs.

Are Terminated Participants who terminated prior to 2020 permitted to request a CRD? Thank you

There's nothing in the CARES Act that says they can't. The plan document might restrict CRDs to only active employees though.

Most of us probably don't have CARES amendments in hand yet. You should ask your document provider if there is anything in their CARES amendment which would restrict a terminated participant from taking a CRD.

There is always the option to roll the balance over to an IRA, and then take their CRD from there.

A CRD from a plan merely means that a distribution that would, in the absence of CARES, be precluded is allowable.  So the relevant question is whether this terminated participant is precluded from receiving a distribution.  

21 hours ago, Mike Preston said:

A CRD from a plan merely means that a distribution that would, in the absence of CARES, be precluded is allowable.  So the relevant question is whether this terminated participant is precluded from receiving a distribution.  

Mike, the terminated participant is eligible to receive a distribution. Are you saying the CRD is not an option because of this? 

21 hours ago, C. B. Zeller said:

There's nothing in the CARES Act that says they can't. The plan document might restrict CRDs to only active employees though.

Most of us probably don't have CARES amendments in hand yet. You should ask your document provider if there is anything in their CARES amendment which would restrict a terminated participant from taking a CRD.

There is always the option to roll the balance over to an IRA, and then take their CRD from there.

Exactly what I was thinking both in terms of the Amendment and the "work-around" with an IRA. I would imagine the Amendment will not preclude them if CARES Act does not, at least not the snap on at the sponsor level.  

I thought in one of the many, many webcasts on CARES, I thought someone addressed this -- CRD and term ppts -- however I can not put my finger on it. I am fairly certain the term ppt wants the CRD to avoid tax withholding at the point of distribution. 

12 hours ago, cheersmate said:

Mike, the terminated participant is eligible to receive a distribution. Are you saying the CRD is not an option because of this? 

 

 

Mike was saying the opposite of that.

On 9/19/2020 at 11:51 PM, Mike Preston said:

So the relevant question is whether this terminated participant is precluded from receiving a distribution.  

Agreed, but I also think the mandatory withholding on a termination distribution vs voluntary withholding on a CRD is relevant. 

8 minutes ago, Bill Presson said:

Mike was saying the opposite of that.

Mikes seems to me to be saying CARES Act provides distributions that would otherwise be precluded.  In this case the term ppt can elect to receive a termination distribution... however would like it to be a CRD and I imagine it is to avoid tax withholding at the point of distribution.

1 hour ago, RatherBeGolfing said:

Agreed, but I also think the mandatory withholding on a termination distribution vs voluntary withholding on a CRD is relevant. 

I agree, and believe this to be the issue for the term ppt.

Based on all of the above, is it correct to say a Terminated Participant is permitted to request a CRD and be sure the Amendment is modified if necessary to permit it?