QPlan termination and NUA
If a qualified plan is terminated, either by the company or because the company was taken over by another for a material change, would the employees be entitled to take a Lump Sum Distribution and thus take advantage of the NUA treatment? I guess specifically, do the normal 4 triggering events still apply? – m
Permalink Submitted by Alan - IRA critic on Thu, 2021-08-26 15:27
The triggering events do not change, but the question here is whether the particular ownership change constitutes separation from service. Merger and acquisition transactions can be set up in different ways, so the separation question can only be answered by the management of the new company. If separation occurred, the utilization of NUA applies as does access to the funds for distribution, IRA rollovers, etc. I suppose it’s possible that a 401k could be treated differently than an ESOP in certain cases, but a letter to all former employees should be sent that clarifies all of the common issues they face.
Permalink Submitted by [email protected] on Fri, 2021-08-27 16:07
great, thanks! – m