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AKconsult

Feb 18 2009, 09:55 AM

I know employers can decide whether or not to include rollovers when determining whether the distribution is $5000 or less and therefore eligible to be forced out.
However, I was thinking that when looking at whether the distribution is more than $1000 (and therefore has to be rolled rather than paid in cash) you must always include the rollover balance.
But now that I am looking into it, I can't substantiate that.
Does the ability to include/exclude rollovers extend to both the $1000 and $5000 determination?

J Simmons

Feb 18 2009, 10:00 AM

Yes.

Kevin C

Feb 18 2009, 06:11 PM

No, If you exclude rollovers from the cashout determination, you still have to do the automatic rollover if the distribution is more than $1,000.

From Notice 2005-5:

QUOTE

Q-14. Are amounts attributable to rollover contributions that exceed $5,000 subject to the automatic rollover provisions of §401(a)(31)(B)?

A-14. Yes. Section 401(a)(31)(B) applies to the entire amount of a mandatory distribution. Thus, for example, the portion of the distribution attributable to a rollover contribution is subject to the automatic rollover requirements of §401(a)(31(B), even if that amount is excludable (under §411(a)(11)(D)) from the determination of whether the present value of the nonforfeitable accrued benefit exceeds $5,000.

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