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Mel_1999

Merge 401(a) into a 403(b) Plan

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No.  There is no provision to merge a plan into a plan of a different type.  Your best bet is to terminate the money purchase plan, tell people you are distributing all assets, and allow people to roll over into the 403(b) if they want to.

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Carol... 414(z) of the PATH Act would seem to say that a 401(a) plan can be merged into a 403(b) plan.  My question is whether or not "401(a)" for purposes of the PATH Act Sec 414(z) include a 401(k)?

Thanks!

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"David Levine and David Powell, with Groom Law Group, and Michael A. Webb, vice president, Retirement Plan Services, Cammack Retirement Group, answer: 

It is indeed true that church 401(a) and 401(k) plans can now be merged with 403(b) plans, with one major caveat. The Protecting Americans from Tax Hikes Act of 2015 (the PATH Act) added a new Code Section 414(z) that permits mergers of church 401(a) and 401(k) plans with 403(b) plans so long as the accrued benefit of each participant is a) the same or greater than it was prior to the merger and b) nonforfeitable after the merger.

However, the Act directed the Secretary of the Treasury to issue rules as to how to complete such mergers, and Treasury has yet to issue such guidance. Without such guidance, churches that attempt to implement such mergers at the present time, though technically permitted by the PATH Act, run the risk of noncompliance with any future Internal Revenue Service (IRS) guidance that may be issued.

Of course, as with any transaction of this magnitude, counsel with specific expertise in church plans should be consulted prior to taking any action.  " 

 

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