Flyboyjohn Posted February 15, 2016 Share Posted February 15, 2016 Terminating custodial account (mutual fund) 403(b) and offering new 401(k)(realize merger not possible). Same custodian in each plan. Current 403(b) participants will be offered cash-out, rollover to IRA or rollover to new 401(k). For participants NOT making an affirmative election sponsor wants to make the default a rollover to the 401(k). Also, since the same funds will be available in the 401(k) sponsor wants the default investment election to be the same elections the participant had made in the 403(b). Assuming all appropriate disclosures are made are there any problems with this approach? Link to comment Share on other sites More sharing options...
AMDG Posted February 15, 2016 Share Posted February 15, 2016 I have seen plan sponsors take this approach, but the danger is that there safe harbor protections of the Code and ERISA that support default IRA rollovers will not be available. So, even though the plan sponsor wants to do the right thing for its participants, if the market goes down, it practically guaranteed that some participants will sue the plan sponsor. Is that an acceptable risk? Link to comment Share on other sites More sharing options...
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