New law liberalizes rollovers, complicates tax withholding on qualified plan distributions

Article Abstract:

The Unemployment Compensation Amendments of 1992 make more lenient earlier law on rollovers of qualified pension plan distributions and Section 403(b) annuities to other qualified plans and individual retirement accounts. Qualified plans must also offer participants the 'Direct Rollover' option and a mandatory 20% withholding will apply to qualified plan distributions not using this option.

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Nonmarried participant must be provided adequate notice and must give written consent before lump sum distribution

Article Abstract:

The 9th Circuit ruled in Franklin v Thornton that a letter from an unmarried participant requesting a lump sum distribution did not constitute adequate consent to the distribution. This was because it was sent before receipt of the legally required description of the plan's distribution options. IRC 417(e)(2) is the code section requiring written consent.

Cases, Unmarried couples, Consent (Law)

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Cutting back on the anti-cutback rule: new final regulations under s. 411(d)(6)

Article Abstract:

The author discusses IRC section 411(d)(6) restrictions to eliminating or changing qualified pension plan via merger or amendment and changes to this cut-back rule.

United States

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