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5500/8955-ssa Form: What You Should Know
Awarding of Benefits — DWC | The 401(k) Experts What is considered a qualifying severance payment? In order to be considered a qualifying severance payment, the payment must be within the severance agreement at the separation date Who is eligible for a Qualifying Termination Payment? All retirement and nonqualified annuities plans are eligible to pay payments to employees who terminate in a nonqualifying transition period.  How long does the plan have to pay a severance payment to a plan participant? For participants who terminate with a plan at a reduced value, the payment has to be made within a “qualifying time” period, as defined by each individual plan. The qualifying time period is the length of the plan year in which the participant separated from employment. The plan has to establish and maintain the qualifying severance  It is anticipated that the time period for providing any qualified severance to a participant in a plan is one year from the end of the plan year in which the plan year began. For example: The plan year begins January 1, 2018, and end August 31, 2019. So, for this plan, the qualified severance payments will be provided after March 1, 2020. However, this will be subject to change from year to year. The only time during the plan period that the termination payments have to be made is, of course, during the year of separation. The Plan Sponsor should consult with the Pension Benefit Guaranty Corporation as soon as possible after the date of separation to determine what, if any, payments can or need to be made. Q-1: If I am a plan beneficiary of a defined benefit plan, can I be terminated without having to make a qualifying severance payment when I leave to start another job? D.O., Plan Sponsor A-1 — “I am a participant in a plan that has qualified and limited terminations” Q-2 — “I have worked full-time for 12 consecutive months and my benefits will run out (at age 65).” Q-3 — “I am not covered by another employer's plan. I have no other employer plans to which I can contribute. I would like to remain part-time while working full time. The amount of pension I am entitled to under the plan is reduced by 20%.
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