Involuntary Cash-Out
Distributing the balance of a participant's retirement account under a qualified plan without the written consent of the participant, the participant's spouse or beneficiary.
Investopedia Commentary
Involuntary cash-out usually occurs if the participant's balance is no more than $5,000 and he or she is either no longer employed by the employer sponsoring the qualified plan, or has died. Effective Mar 28, 2005, a qualified plan must ensure either that cash-out balances between $1,000 and $5,000 are rolled to a Traditional IRA (by means of an automatic rollover), or that cash-outs will not occur if the participant's balance is more than $1,000.
Related Links
Changes In Cash-Out Rules For Qualified Plans
Introductory Tour through Retirement Plans
See also: 401(k) Plan, Automatic Rollover, Distribution, Qualified Retirement Plan, Rollover, Traditional IRA, Vesting