What are the consequences of an plan administrator (employer) authorizing plan distributions earlier than allowed in the plan document? The timing per the adoption agreement is within a reasonable time period after the plan year in which termination of employment occurs. The employer is paying out benefits to participants who terminated in 2001. This is a money purchase plan with a 1000 hour/ last day requirement to receive a contribution so these people will not be receiving any additional contrbutions into the plan.

I have always been a stickler at following the plan document when it comes to the timing of distributions, but it seems like plan sponsors i am currently working with as well as other professionals in the business have become very "flexible" in paying participant out.

Anyone have any insight?

The plan has an operational failure. For correction, you can look to the SVP program - I'd have to look, but I think you'd generally correct under APRSC.

You may also have de facto changed your plan document. If the actual distributions have in any way been discriminatory, get thee to a lawyer.