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Can an employer transfer entire plan to new platform?

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I see plenty of threads on this question and I see that the answer is NO, an employer cannot transfer an entire plan and that each participant must direct the transfer.  Since these threads are outdated, I was just wondering if anything has changed to make it possible for an employer-directed plan transfer? 


In this case, it is a non-ERISA 403(b) plan, if that matters.

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The key is to understand the parameters for making the determination; it's never a hard no or yes when this only information available is that it's a 403(b).  Knowing that it's a church plan does help. Of course, non-electing churches and public school systems are not going to be subject to ERISA.

Typically, when dealing with non-church and non-govt 403(b) plans; ERISA status is determined by the control the Employer has over the accounts.  If the employer's involvement is "limited" enough, then the account will not be subject to ERISA.  One of those "limits" in the determination, is whether or not the employer can direct a transfer to another provider.  Hence, if you have a non-ERISA 403(b) plan of typical 501(c)(3), then that employer would not be able to direct a transfer.... because if they actually had that authority, then the plan would've been subject to ERISA (merely because they had that authority).

So, given your fact pattern, (unless I'm missing something), the church would be able to direct the transfer and it would have no impact on ERISA status; because employer involvement is not relevant in determining whether the plan is subject to ERISA. 

I don't know the specific details of your case, but thought I could provide a little insight in how these issues fit together. 

Good Luck!


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ETA - I like your though process and, in this case, the church would be happy to hear that they can direct the transfer of the entire plan to a new vendor.  If the only reason that a non-church non-ERISA 403(b) can NOT have an employer-directed transfer is because of the ERISA implications, then it makes sense that the church CAN do it.  I admit that I am still hesitant.  I guess I am unsure if ERISA status is the only consideration.  Can 403(b) Plans that ARE subject to ERISA (assume not a church) have employer-directed transfers of entire plans?  I am not clear on that either, but, if the answer is YES, then I will feel better about the church plan doing this.



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  • 5 months later...

I was under the impression that the issue with employer-directed transfers of plan assets from one platform/vendor to another has to do with the terms of the individual annuity contracts held under the plan. Because those contracts are between the participant and the vendor and not the plan and the vendor, it is the participant who has the power to direct/approve a transfer to another vendor and not the employer/plan. In other words, ERISA-covered status is irrelevant - the contract terms are what matters.

Isn't that why 403(b) plans are so complicated to administer and record keep? There's more than one vendor and many different investment options because the plan sponsors have to retain the old vendors/investment options for the participants who don't sign off on the transfer of their individual annuity contracts when the plan sponsor moves to a new vendor.

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