SETTING LIMITS: IRS PROPOSAL COULD CLOSE LOOPHOLE.

Pensions & Investments, January, 1999 by Hoffmann, Mark A.

Employers could enjoy more flexibility in cashing out small pension accounts if a proposed regulation from the Internal Revenue Service goes into effect. The IRS proposal came as a result of a provision in the Taxpayer Relief Act of 1997. The provision increased to $5,000 from $3,500 the maximum limit on distributions from qualified retirement plans that could be made without the participant's consent.

Such small accounts would typically occur in defined benefit plans after an employee leaves the company well before retirement age. The law left unclear exactly how the transition from one limit to the other would work, said Jeff Munn, an attorney and consultant with Hewitt Associates LLC in Lincolnshire, Ill. That point is important to employers because of...

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