I have a client who is getting ready to distribute funds to a terminated employee who owes the company money. The client asked if they could net the amount owed the company out of the retirement plan distribution. Has anyone had this situation before?

Short answer is that the employer cannot touch the plan distribution.

If the employer gets very sophisticated advice from a competent advisor, there are ways to educate a particpant about the convenience of choosing to use a part of a plan distribution to settle a debt to the employer. This is playing with fire. Don't do it unless you know exactly what you are doing. Go back to the short answer.

Thank you, I thought that was going to be the answer.

I think there may be other similar discussions that may help you.



http://benefitslink.com/boards/index.php?showtopic=8293

http://benefitslink.com/boards/index.php?showtopic=4546