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403(a) plans


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I an not familiar with 403(a) plans and appreciate our comments. It is my understanding that these plans are funded solely by employer contributions and thus are ERISA qualified arrangements. Do these plans requrie a plan document? Can monies from these plans be transferred to a 403(b)plan? Can the 403(a) be converted to a 401(a) plan?

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I an not familiar with 403(a) plans and appreciate our comments. It is my understanding that these plans are funded solely by employer contributions and thus are ERISA qualified arrangements. Do these plans requrie a plan document? Can monies from these plans be transferred to a 403(b)plan? Can the 403(a) be converted to a 401(a) plan?

Don't understand your question. What is your understanding of what a 403(a) plan is?

Thomas L. Geer, J.D., LL.M.

Benefit Plan Solutions

Blog: http://401k-403b-457-plansblog.blogspot.com/

Email: geertom@gmail.com

Phone & Fax: (888) 315-6720

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My understanding of 403(a) arrangements are as follows:

-A qualified plan funding only through annuities

-Funded solely by employer contributions

-Must have independent investment advice.

Questions:

Do these arrangments require a plan document?

Form 550 annual reporting required?

Can a 403(a) convert to a 401(a) plan?

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My understanding of 403(a) arrangements are as follows:

-A qualified plan funding only through annuities

-Funded solely by employer contributions

-Must have independent investment advice.

Questions:

Do these arrangments require a plan document?

Form 550 annual reporting required?

Can a 403(a) convert to a 401(a) plan?

A 403(a) plan is a qualified plan funded by a group annuity contract instead of a trust. It is subject to all the other requirements for qualified plans including the requirement to have a written plan document. See IRC 404(a)(2). Annual reporting is required. Rollovers are permitted between 403(a) plans and 403b annuities if a distribution event has occurred.

I dont know what you mean by converting to a 401(a) plan. A qualified trust under 401(a) can hold an annuity contract under 403(a).

mjb

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My understanding of 403(a) arrangements are as follows:

-A qualified plan funding only through annuities

-Funded solely by employer contributions

-Must have independent investment advice.

Questions:

Do these arrangments require a plan document?

Form 550 annual reporting required?

Can a 403(a) convert to a 401(a) plan?

1-Ordinarily, the annuity itself or a plan document provided by the insurer and synching up with the annuity will contain the plan language. But some document has to jump through the 401(a) hoops.

2-Yes. Reporting is simpler as to financial matters.

3-Yes. Or it can be one of more than one funding vehicles, alongside a trust or custodial account.

Thomas L. Geer, J.D., LL.M.

Benefit Plan Solutions

Blog: http://401k-403b-457-plansblog.blogspot.com/

Email: geertom@gmail.com

Phone & Fax: (888) 315-6720

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My understanding of 403(a) arrangements are as follows:

-A qualified plan funding only through annuities

-Funded solely by employer contributions

-Must have independent investment advice.

Questions:

Do these arrangments require a plan document?

Form 550 annual reporting required?

Can a 403(a) convert to a 401(a) plan?

A 403(a) plan is a qualified plan funded by a group annuity contract instead of a trust. It is subject to all the other requirements for qualified plans including the requirement to have a written plan document. See IRC 404(a)(2). Annual reporting is required. Rollovers are permitted between 403(a) plans and 403b annuities if a distribution event has occurred.

I dont know what you mean by converting to a 401(a) plan. A qualified trust under 401(a) can hold an annuity contract under 403(a).

Agreed. Our posts were almost simultaneous, so I hadn't seen this.

Better put that mine.

Thomas L. Geer, J.D., LL.M.

Benefit Plan Solutions

Blog: http://401k-403b-457-plansblog.blogspot.com/

Email: geertom@gmail.com

Phone & Fax: (888) 315-6720

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A follow-up question, if you please.

Would terminating the 403a program present the same obstacles as terminating a 403(b0 plan? That is if the plan contains individual annuity contracts, the employer probably would have no control or authority to liqiudate the assets for distribution. Therefore, the assets may not be distributed as soon as adminstratively practicable after termination of the plan and not be eligible for eligible rollover treatment.

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It is easy to terminate - they are individual contracts, and so anyone that does not consent gets the contract distributed out to them as a nontransferable annuity. The insurance provider would retitle the contract as an individual NTA (nontransferable annuity) which sits as a frozen contract, no new contributions.

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A follow-up question, if you please.

Would terminating the 403a program present the same obstacles as terminating a 403(b0 plan? That is if the plan contains individual annuity contracts, the employer probably would have no control or authority to liqiudate the assets for distribution. Therefore, the assets may not be distributed as soon as adminstratively practicable after termination of the plan and not be eligible for eligible rollover treatment.

I dont think that 403a plan can be funded with individual annuity contracts because the plan assets cannot be subject withdrawal by the employee before a distribution event occurs, e.g. termination or death. If employee's benefits are held in individual contracts employee could cash out at any time in violation of rules against pre retirement distribution.

mjb

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A follow-up question, if you please.

Would terminating the 403a program present the same obstacles as terminating a 403(b0 plan? That is if the plan contains individual annuity contracts, the employer probably would have no control or authority to liqiudate the assets for distribution. Therefore, the assets may not be distributed as soon as adminstratively practicable after termination of the plan and not be eligible for eligible rollover treatment.

I dont think that 403a plan can be funded with individual annuity contracts because the plan assets cannot be subject withdrawal by the employee before a distribution event occurs, e.g. termination or death. If employee's benefits are held in individual contracts employee could cash out at any time in violation of rules against pre retirement distribution.

Depends on the terms of the annuity contract. To be a 403(a) annuity, the contract has to limit distributions as per 401(a), so this should turn out to ne a theoretical rather than real world issue. That is, if the contract doesn't have appropriate limitations, it's not a 403(a) annuity to start with.

Thomas L. Geer, J.D., LL.M.

Benefit Plan Solutions

Blog: http://401k-403b-457-plansblog.blogspot.com/

Email: geertom@gmail.com

Phone & Fax: (888) 315-6720

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