M.A.
Jul 10 2006, 03:59 PM
Employee terminated 6/30/06. Completed request for distribution upon termination. Re-hired 7/5/06. Can distribution still be made?
JanetM
Jul 10 2006, 05:04 PM
My vote would be no. They are now an active participant and can't receive distribution.
Pensions in Paradise
Jul 10 2006, 07:54 PM
I agree. Also, the IRS would probably consider this a sham termination, in that the participant was only terminated for one business day.
M.A.
Jul 11 2006, 09:37 AM
OK, I read the previous threads. If I understand it correctly, there is no hard rule about how long you have to be unemployed before re-hired. But the IRS has the discretion to make the call that the period of termination was not long enough (which I feel in this case) or that the employer participated and disqualify the plan?
Nate X
Jul 11 2006, 11:16 AM
Regardless if the the termination is a sham or not, the participant in this case has already been rehired. So he/she can not take a distribution by reason of termination of service.