Early payment from a profit sharing plan

P/OPINION 75-70


                                                                 206


                        December 14, 1975


Dear              :

This is in response to your letter concerning the
Employee Retirement Income Security Act of 1974 (ERISA).
We regret that we were unable to reply to your letter sooner.

You state that your company maintains several profit-
sharing plans for the benefit of the employees of various
subsidiaries and divisions. These plans generally
provide that when an employee leaves the service of the
company, except when terminated for cause, his full share
in the plan is paid over to him after the close of the plan
year in which he leaves if such share is below a certain
dollar amount; otherwise, the employee does not receive
payment until he reaches retirement age. You ask whether
such early payment is permissible under the ERISA or must
a one-year break in service elapse first.

Section 206(a) of the ERISA provides than an employee pension
benefit plan shall provide that, unless, a participant
otherwise elects, the payment of benefits under the plan
to participants shall begin not later than the 60th day after
the close of the plan year in which (1) the participant
attains the earlier age of 65 or the normal retirement age
under the plan, (2) the 10th anniversary of the year in
which the participant commences participation or (3) the
participant terminates his service with the employer, whichever
of the three dates is the latest. However, there is nothing
in the provisions of the ERISA or the implementing regulations
that would prohibit the plan from providing for the payment
of benefits at an earlier date, so long as such a provision
is applied in a uniform manner. It would not be necessary
to wait for a one-year break in service before the payment
of benefits.

We hope that this information will be helpful to you. If you
have other questions concerning the ERISA, please make further
inquiry.

Sincerely,