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TonyO

Timing And Form Of Distributions

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I have a 457(b) plan of a non-governmental sponsor that requires 180 days notice for the choice of the form of benefit. There are only two options; lump sum or "approximately equal" installments (at least annually). Is the 180 days notice a regulatory requirement? Is the "approximately equal" installments form a regulatory requirement?

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The 180 days is something that the written plan document has in place, and it is probably there in order to allow a terminated participant enough time to make a written election to delay the taxation of amount to a future date. The employer is required to follow the terms of the written plan document.

 

The installment option is also something that the written plan document has in place, although that language might have some wiggle room for interpretation.

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Guest Joel L Frank

TonyO,

 

Find out from your Plan Administrator if the installment option is satisfied with the use of life expectancy tables.

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