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Merging funds


khn

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A university has several small plans they are merging into their main plan. The recordkeeper that is receiving the funds says the accounts can be merged in as a rollover. We argue that records should come over as in a normal conversion (i.e., ee and er money broken out by source). Thoughts?

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This strikes me as the "devil is in the details" kind of question.

Are the plans that are ending being truly merged or are they being terminated and the people have a choice to take the funds or put them in the new plan?

If it is a merge (the employees have no choice their money is going to the new plan because the trustee/sponsor said so) then I would tend to agree such characteristics as ee vs er have to be preserved. (In a merger if there is a source of money that required spousal consent that would have to be preserved also.)

If the plans are being terminated and the people have a choice to take the money run, put in an IRA or the other plan that would be a rollover source.

There might be other factors that could influence this decision but that seems like the most important one.

(Lou must have answered while I was typing and I didn't notice it)

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