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Purchase Service Credit


Guest Serena
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Guest Serena

Code Section 415(n)(3) allows trustee-to-trustee transfers from 403(b) or 457(b) plans for the purchase of permissive service credits under the state defined benefit plan.

However, can the same type of tax free transfer be made from a governmental 401(a) plan to the state defined benefit plan?

Many thanks!

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Code Section 415(n)(3) allows trustee-to-trustee transfers from 403(b) or 457(b) plans for the purchase of permissive service credits under the state defined benefit plan.

However, can the same type of tax free transfer be made from a governmental 401(a) plan to the state defined benefit plan?

Many thanks!

Yes. 415(n) is necessary only where the amounts received by the DB plan are from the participant, a 403(b) or a 457(b).

It would be possible to create a qualified plan DC-DB transfer that raised problems. For example, a transfer from a qualified DC plan of $1 for an annual benefit of $1000 under the DC plan has to raise issues about 415 compliance.

Ordinarily, these sorts of 415 issues under DB plans are dealt with by actuaries, so I have never looked at the constraints in detail.

Tom Geer

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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