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ERISA 403b conversion to non-ERISA 403b


Guest JPotosky
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Guest JPotosky

I have a client with an ERISA 403(B) that has no vesting schedule. The accounts are held in FBO accounts with a mutual fund family where the employer is the custodian. It is not on a 403b platform. Needless to say the admin is a nightmare.

Can the employer convert the 403b plan to a non-ERISA plan and funnel employer contributions into a SEP? This wold eliminate annual 5500 reporting and would transfer custodial responsiblities to the mutual fund family. The employer is comfortable with the SEP eligibility rules.

Any problems with this strategy? Any pitfalls that I should be aware of? Would this involve a termination of the prior plan or just a restatement? Any help regarding implementation issues?

Joe Potosky

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This is not an area of expertise for me so please forgive any foolish questions, I am trying to learn and understand.

What is an FBO account?

How can a 403(B) plan that has the funds invested in a mutual fund, and I assume that this is a 403(B)(7) fund, have the employer as the custodian?

How can a 403(B) plan not be on a 403(B) platform, whatever that is?

What would make the plan become non-ERISA ?

Why would a SEP with employer contributions not be an employee plan still subject to ERISA, since apparently the entity is not ERISA exempt?

George D. Burns

Cost Reduction Strategies

Burns and Associates, Inc

www.costreductionstrategies.com(under construction)

www.employeebenefitsstrategies.com(under construction)

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