Question

Profit sharing plans

a.) Do not allow in-service withdrawals.
b.) May permit in-service withdrawals after two years of service.
c.) Allow distributions only at termination of the employee.
d.) Must permit in-service withdrawals after two years of service.

Answer 1

Profit sharing plans may permit in-service withdrawals after two years of service (option b), but it is not a requirement.

Step-by-step explanation:

Profit sharing plans can have different rules regarding in-service withdrawals. Option A is incorrect because some profit sharing plans do allow in-service withdrawals, although it is not a common feature. Option B is incorrect because there is no standard requirement for profit sharing plans to permit in-service withdrawals after two years of service.

Option C is incorrect because profit sharing plans can allow distributions throughout the employee's tenure, not just at termination. Option D is correct because profit sharing plans may choose to permit in-service withdrawals after two years of service, but it is not a requirement.