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Practice Management

Deferring a Distribution Election

Q. Suppose that a participant submits a distribution election that defers payment from the plan until normal retirement age, which the plan defines as age 65. The top hat group member fully intends to retire, but is asked to stay on for another year until they find a suitable replacement; he/she agrees to do so. What happens here? The person is still employed. Do they need to use the one-time election change to delay the payment, or is it not made because the member never separated from service?

A. If they never had a distributable event, then you are correct – there is no reason to defer.