Distribution Restrictions Under A Code Section 401(k) Plan Clause Samples
This clause defines the limitations and conditions under which distributions can be made from a retirement plan governed by Section 401(k) of the Internal Revenue Code. It typically restricts withdrawals to specific events such as retirement, termination of employment, disability, or financial hardship, and may outline the procedures for requesting a distribution. The core function of this clause is to ensure compliance with federal tax laws and to prevent premature access to retirement savings, thereby preserving the plan's tax-advantaged status and protecting participants' long-term financial security.
Distribution Restrictions Under A Code Section 401(k) Plan. If the Employer’s Plan includes a cash or deferred arrangement or if transferred assets described in paragraph 6.15 are subject to the distribution restrictions of Code Sections 401(k)(2) and 401(k)(10), the special distribution provisions of this paragraph apply. The portion of the Participant’s Vested Account Balance attributable to Elective Deferrals or ▇▇▇▇ Elective Deferrals (or to amounts treated under the cash or deferred arrangement as Elective Deferrals such as QNECs and QMACs and income allocable to each) are not distributable earlier than upon the Participant’s severance from employment, death, or Disability. Such amounts may also be distributed upon:
(a) Termination of the Plan without the Employer maintaining another Defined Contribution Plan [other than an employee stock ownership plan as defined in Code Section 4975(e)(7) or 409(a), a Simplified Employee Pension Plan as defined in Code Section 408(k), a SIMPLE IRA Plan as defined in Code Section 408(p), a Plan or contract described in Code Section 403(b), or a Plan described in Code Section 457(b) or (f)] at any time during the period beginning on the date of Plan termination and ending twelve (12) months after all assets have been distributed from the Plan. Such a distribution must be made in a lump sum.
(b) The attainment of age 59 1/2 in the case of a profit-sharing plan.
(c) The Hardship of the Participant, as described in paragraph 6.11. For Plan Years beginning prior to 2002, such amounts could also be distributed upon:
(d) The disposition by a corporation to an unrelated corporation of substantially all of the assets [within the meaning of Code Section 409(d)(2)] used in trade or business of such corporation if such corporation continues to maintain the Plan after the disposition, but only with respect to the Employees who continue employment with the corporation acquiring such assets. Such a distribution must be made in a lump sum.
(e) The disposition by a corporation to an unrelated entity of such corporation’s interest in a subsidiary [within the meaning of Code Section 409(d)(3)] if such corporation continues to maintain the Plan, but only with respect to Employees who continue employment with such subsidiary. Such a distribution must be made in a lump sum. All distributions that may be made pursuant to one or more of the foregoing distributable events are subject to the spousal and Participant consent requirements (if applicable) contained in Code Sections 401(a)(11) and 417. Oth...
Distribution Restrictions Under A Code Section 401(k) Plan. If the Employer’s Plan includes a cash or deferred arrangement or if transferred assets described in paragraph 6.13 are subject to the distribution restrictions of Code Sections 401(k)(2) and 401(k)(10), the special distribution provisions of this paragraph apply. The portion of the Participant’s Vested Account Balance attributable to Elective Deferrals (or to amounts treated under the cash or deferred arrangement as Elective Deferrals) is not distributable on account of Plan termination, as described in this paragraph, unless:
(a) the Participant otherwise is entitled under the Plan to a distribution of that portion of the Vested Account Balance, or
(b) the Plan termination occurs without the establishment of a successor Plan. A successor Plan under subparagraph (b) is a Defined Contribution Plan other than an employee stock ownership plan [as defined in Code Section 4975(e)(7)], a Simplified Employee Pension Plan [as defined in Code Section 408(k)], or a SIMPLE IRA Plan [as defined in Code Section 408(p)] maintained by the Employer (or by a related Employer) at the time of the termination of the Plan or within the period ending twelve (12) months after the final distribution of assets. A distribution pursuant to this subparagraph (b), must be part of a lump sum distribution(s) to the Participant of his Vested account balance.
(c) The disposition by a corporation to an unrelated entity of such corporation’s interest in a subsidiary [within the meaning of Code Section 409(d)(3)] if such corporation continues to maintain the Plan, but only with respect to the Employees who continue employment with such subsidiary.
(d) In connection with the disposition by an Employer of less than 85% of the assets used by the Employer in a trade or business to an unrelated entity, distribution of the entire Vested Account Balance of an Participant who continues employment with the acquirer will, if so agreed to by the Employer, be made to the Participant in a single lump sum. This paragraph shall apply if the acquirer does not maintain the Plan after disposition and only if such Employee’s change in employment status constitutes a “separation from Service” within the meaning of Code Section 401(k)(2)(b)(i)(I).
Distribution Restrictions Under A Code Section 401(k) Plan. If the Employer’s Plan includes a cash or deferred arrangement or if transferred assets described in paragraph 6.13 are subject to the distribution restrictions of Code Sections 401(k)(2) and 401(k)(10), the special distribution provisions of this paragraph apply. The portion of the Participant’s Vested Account Balance attributable to Elective Deferrals (or to amounts treated under the cash or deferred arrangement as Elective Deferrals) is not distributable on account of Plan termination, as described in this paragraph, unless:
(a) the Participant otherwise is entitled under the Plan to a distribution of that portion of the Vested Account Balance, or
(b) the Plan termination occurs without the establishment of a successor Plan. A successor Plan under subparagraph (b) is a Defined Contribution Plan other than an employee stock ownership plan [as defined in Code Section 4975(e)(7)], a Simplified Employee Pension Plan [as defined in Code Section 408(k)], or a SIMPLE IRA Plan [as defined in Code Section 408(p)] maintained by the Employer (or by a related Employer) at the time of the termination of the Plan or within the period ending twelve (12) months after the final distribution of assets. A distribution pursuant to this subparagraph (b), must be part of a lump sum distribution(s) to the Participant of his Vested account balance.
Distribution Restrictions Under A Code Section 401(k) Plan. If the Employer’s Plan includes a cash or deferred arrangement or if transferred assets described in paragraph 6.13 are subject to the distribution restrictions of Code Sections 401(k)(2) and 401(k)(10), the special distribution provisions of this paragraph apply. The portion of the Participant’s Vested Account Balance attributable to Elective Deferrals (or to amounts treated under the cash or deferred arrangement as Elective Deferrals) is not distributable on account of Plan termination, as described in this paragraph, unless:
Distribution Restrictions Under A Code Section 401(k) Plan. If the Employer’s Plan includes a cash or deferred arrangement or if transferred assets described in paragraph 6.15 are subject to the distribution restrictions of Code Sections 401(k)(2) and 401(k)(10), the special distribution provisions of this paragraph apply. The portion of the Participant’s Vested Account Balance attributable to Elective Deferrals or ▇▇▇▇ Elective Deferrals (or to amounts treated under the cash or deferred arrangement as Elective Deferrals such as QNECs and QMACs and income allocable to each) are not distributable earlier than upon the Participant’s severance from employment, death, or Disability. Such amounts may also be distributed upon:
(a) Termination of the Plan without the Employer maintaining another Defined Contribution Plan [other than an employee stock ownership plan as defined in Code Section 4975(e)(7) or 409(a), a Simplified Employee Pension Plan as defined in Code Section 408(k), a SIMPLE IRA Plan as defined in Code Section 408(p), a Plan or contract described in Code Section 403(b), or a Plan described in Code Section 457(b) or (f)] at any time during the period beginning on the date of Plan termination and ending twelve (12) months after all assets have been distributed from the Plan. Such a distribution must be made in a lump sum.
(b) The attainment of age 591/2 in the case of a profit-sharing plan.
(c) The Hardship of the Participant, as described in paragraph 6.11.
Distribution Restrictions Under A Code Section 401(k) Plan. If the Employer’s Plan includes a cash or deferred arrangement or if transferred assets described in paragraph 6.15 are subject to the distribution restrictions of Code Sections 401(k)(2) and 401(k)(10), the special distribution provisions of this paragraph apply. The portion of the Participant’s Vested Account Balance attributable to Elective Deferrals or ▇▇▇▇ Elective Deferrals (or to amounts treated under the cash or deferred arrangement as Elective Deferrals such as QNECs and QMACs and income allocable to each) are not distributable earlier than upon the Participant’s severance from employment, death, or Disability. Such amounts may also be distributed upon: