Is it permissible to pay out the employee contribution portion of a pension benefit first?

We have a plan that brought several employers together. Two of the employers had plans where employees contributed after-tax. All of these different plans were "rolled-up" into the current plan. We have continued to account for all of the employee contributions but when an employee leaves we would like to pay that amount first if possible. We have situations where employees terminate and rehire all the time and the administration can get very cumbersome.

Any guidance on this issue would be greatly appreciated.
Thanks,
Fred

The answer may depend on what you mean by "first".
- If you mean "now", with no reduction to the employee's accrued benefit, then you probably can do that, via proper plan amendment.
- If you mean "immediately upon severance of employment", it seems unlikely that you could amend the plan to require this [see IRC 411(d)(6)].

Important: in both cases, current plan provisions must be reviewed. Make sure you confirm action with your ERISA attorney.

For clarification-
We are looking to pay the employee contributions out first, when distribution is sought by employee according to plan document provisions.

so, employee requests distribution, employee contributions are first ones out the door.

Thanks,
Fred