Qualified Retirement Plans Must Comply With Automatic

Rollover Rules By March 28, 2005

Effective for distributions made on or after March 28, 2005, qualified retirement plans must comply with the automatic rollover provisions of Internal Revenue Code section 401(a)(31)(B). Many 401(k) plans and other qualified retirement plans provide for immediate distribution of account balances or accrued benefits of less than $5,000, without the participant's consent. The new rules provide that any distribution of more than $1,000 must be deposited in an individual retirement account for the participant's benefit, unless the participant consents to receive the distribution in cash or have it rolled over to another plan.

Plan sponsors may choose to comply with the new rules or may choose to require participant consent for all distributions over $1,000. Plans must comply with the new rules in operation for distributions made on or after March 28, 2005. Plans must be amended to either comply with the new rules or to eliminate cash out distributions of amounts greater than $1,000 by the end of the first plan year ending on or after March 28, 2005 (for calendar year plans, amendments must be adopted by December 31, 2005).

We are also very pleased to announce that employee benefits lawyer James C. Paul joined Downey Brand on March 10th. Jim's move provides the region's employers with a new option for employee benefits counseling. A former shareholder at Chang, Ruthenberg & Long PC, Jim joins Downey Brand as a partner. Jim brings more than 17 years of experience and his practice includes working with qualified retirement plans, nonqualified deferred compensation plans, welfare plans, stock based compensation plans, and all aspects of employee benefits law. Jim's experience also includes pension and welfare benefits litigation, fiduciary litigation and representation of Taft-Hartley trust funds.