We have a client who terminated from his former plan and would like to withdraw his 401(k) funds. The plan document says that termination distributions will be processed two years after the last valuation date.

Several sources have said this can't be right post EGTTRA & GUST, but no one has been able to find anything saying otherwise. So far I have located the following DOL guideline:

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ERISA provides specific rules governing when you may or must begin receiving your pension benefits. First, ERISA sets the latest date by which the plan must permit you to begin receiving your benefit. Under this rule, payment must begin by the 60th day after the end of the plan year in which the latest of the following events occur:

(1) you reach age 65 or, if earlier, the normal retirement age specified by your plan;

(2) the end of the 10th year after you began participation in the plan ends; or

(3) you terminate your service with the employer.
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Advice?

Thanks!
FalynnDFW

Usually, termination of employment is different from termination of the plan. The plan provisions will probably indicate that the latter triggers distribution of the benefit in one form or another.

My bad - I phrased that wrong. The plan didn't terminate, he terminated his service with his former employer.

And those stipulations still can be applied to plans. The 2-year wait is certainly within this timeframe. EGTRRA did not change this at all.

Thanks for the help!