Eligible Distributions Clause Samples
The 'Eligible Distributions' clause defines the conditions under which distributions, such as dividends or profits, may be made to shareholders or members of an entity. Typically, this clause outlines the financial or legal criteria that must be met before any distribution can occur, such as the requirement that the company remains solvent after the distribution or that certain reserves are maintained. By specifying these requirements, the clause ensures that distributions are made responsibly and in compliance with applicable laws, thereby protecting the financial stability of the entity and the interests of creditors.
Eligible Distributions. Not all distributions from an ERP are eligible for rollover to a ▇▇▇▇ ▇▇▇. The most common amounts which are not eligible for rollover include required minimum distributions, defaulted loans, substantially equal periodic payments defined in IRC Section 402(c)(4)(A), and hardship distributions. Your employer determines which assets may not be rolled over and must provide you with an IRC Section 402(f) notice of taxation which explains the tax issues and rollover eligibility concerning the distribution.