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Coffee Talk With Benefits Episode 7: Sham Terminations – Gone But Not Forgotten (Podcast) – Employee Benefits & Compensation



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Termination of employment is a distribution event under many
retirement plans, and particularly under individual account defined
contribution plans. But what does it mean to terminate employment?
Is there such a thing as a “sham” termination? It’s
an important question for plans sponsors to consider before
distributing a retirement benefit following the plan
participant’s departure, as a distribution attributable to a
termination that is not bona fide could be considered a plan
disqualification defect, putting the plan’s tax-qualified
status at risk. So how does a plan sponsor determine whether there
was a “termination of employment” that constitutes a true
distribution event? Does the possibility of being rehired put a
distribution made on account of a prior termination of employment
from that employer at risk? Grab your cup of coffee and tune in to
hear Richard and Sarah chat with Seyfarth Partner Christina
Cerasale about these pressing questions and more!

The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.

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