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 Article DKB00127
DATAIR Knowledge Base Article DKB00127
Category: Retirement Documents
Date Added:
1/1/2002 Last Edited: 1/1/2002

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What is the purpose of the option entitled "Minimum distribution to a non-vested Participant?"

A plan that uses a vesting schedule that does not vest Participants upon participation might use this option to provide a minimum distribution to a terminated Participant who would not otherwise receive a distribution because the Participant is 0% vested. The minimum amount could be $25 to $100. Remember when a non-vested Participant terminates he receives a "deemed" distribution. This means that if the terminated Participant is re-hired his account balance must be reinstated without the usual requirement of repayment of any distribution received after termination of service. However, if this Participant were given a minimum distribution, he would have to buy back his forfeited account balance by repaying his distribution. This would act as an administrative check for the plan administrator.

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