RPF M3 U6 Other Distributable Events Flashcards
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Who is responsible for making the decision on participant distributions?
The Plan Administrator, such as Joyce, is responsible for making the decision on whether a participant may take a distribution.
Who is ultimately responsible for distribution of assets from the plan?
The Plan Administrator is ultimately responsible for the distribution of assets from the plan.
What notifications and forms must be provided for a distribution?
Participants must receive a Special Tax Notice, a distribution form, a withholding election form, and a consent form.
What is an involuntary cash-out provision?
An involuntary cash-out provision allows a Plan Administrator to make a plan distribution without participant consent for vested account balances under a specified limit.
What is the cash-out limit for forced distributions?
The cash-out limit for forced distributions is $7,000 or less.
What is the vested account balance limit for automatic rollovers to an IRA?
Amounts over $1,000 are automatically rolled over into an IRA.
What is the tax withholding requirement for distributions over $200?
Amounts over $200 must have taxes withheld from the distribution.
What steps must a Plan Administrator take to locate lost participants?
A Plan Administrator must send a notice via certified mail, check related plan records, check with designated beneficiaries, and use free electronic search tools.
What happens if a lost participant has a vested account balance above the cash-out amount?
The Plan Administrator cannot force the participant out of the plan without consent.
What is the responsibility of a Plan Administrator regarding uncashed checks for small balances?
If a participant does not cash a check for an amount less than $1,000, the Plan Administrator can roll the participant into an IRA.
What is the preferred distribution method for accounts?
The preferred distribution method is an automatic distribution to an IRA account.
What are alternate distribution options if the plan administrator does not roll over the account balance?
The plan administrator may process a distribution to a Federally Insured Bank Account or to Unclaimed State Property, depending on the state of the plan.
What distribution option is unacceptable?
The plan administrator may not use 100% Federal Income Tax Withholding as a distribution option.
Who is responsible for making decisions about distributions?
Joyce, the plan administrator, is ultimately responsible for the assets of the plan.
What should be stated in writing if a fiduciary is designated?
It should be clearly stated in writing in the plan document or the contract signed with the fiduciary.
What is the employer’s responsibility as a plan administrator?
The employer must provide the correct notices and forms in a timely manner.
What is the plan administrator’s duty regarding account balances of former participants?
The plan administrator has a duty to locate participants and must complete a series of steps to do so.
What can the plan administrator do if a participant’s balance is under $7,000?
If the balance is under $7,000 and the plan document includes a cash-out provision, the administrator may force out the balance.
What happens to balances under $1,000?
Balances under $1,000 may be distributed as a lump sum.
What happens to balances greater than $1,000?
Balances greater than $1,000 may be rolled over to an IRA.
Who is ultimately responsible for the distribution of assets from the plan?
The employer as plan sponsor is ultimately responsible, but any party exercising discretion over distribution is accountable as a fiduciary.
What notifications and forms must be provided for a distribution?
Required notifications and forms include the Special Tax Notice, a distribution form, a withholding election form, and participant or spousal consent.
What is an involuntary cash-out provision?
Terminated participants with account balances less than $7,000 may have their assets forced out of the plan if allowed by the plan document.
What happens to balances under $1,000 in an involuntary cash-out?
Balances under $1,000 may be paid as cash.
