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Transfer between 403B providers


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I'm a retired employee and have a 403b issue ... I have/had monies in differing employer sponsored 403b plans (same employer) and I would like to transfer from one 403b plan (Empower - the current administrator) to another existing 403b plan (Lincoln Financial - a former administrator) to take advantage of improved fixed interest account rates (3.5%) but my former employer is prohibiting the transfer. Do I have a legal right to challenge my former employer’s rights to prohibit the transfer?

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The Lincoln 403b plan has a fixed interest option that is paying 3.5% with no disbursement fees should I want to make routine withdrawals...I have some monies in that fixed interest option and since I’m now retired I’m looking to consolidate my accounts and it makes sense to me to transfer monies I want in a fixed interest situation to the one with the best rate (Lincoln @ 3.5%)…

By the way, the Lincoln 403b people had me transfer my Empower 403b (the current administrator) to my personal Schwab IRA account thinking I could then transfer the Schwab monies into the Lincoln 403b account but the former employer denied that also.  So now the Empower monies are in a Schwab IRA.  The Schwab IRA fixed interest option is paying 0.03%.

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Are you reporting that Lincoln does not have a financial product that can be purchased for an IRA investment that approaches the desired Lincoln 403(b) investment option?  Am I incorrect in inferring that the desired investment option in the Lincoln-administered 403(b) plan is a Lincoln product? 

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The contention of the human resources director is that Lincoln Financial (a former 403b administrator plan) is ‘inactive’ and is therefore closed to transfers into it.  My argument is that I was allowed to make a transfer in 2018 (which the human resources director said was a mistake and shouldn’t have been allowed) and the employer plans don’t specifically prohibit the transfer.

 Do you think I’ll be able to find a lawyer to represent me or do you have other recommendations to allow me to improve my financial position by transferring into Lincoln to take advantage of improved fixed interest account rates (3.5%).

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If you’re hoping for comments about strengths and weaknesses in challenging the former employer’s decisions, BenefitsLink people might want to know whether the former employer is a government (for example, a public-schools district), a church or church-controlled, or a charitable organization that is neither governmental nor church-controlled.

 

And recognizing some possibility that State law might matter, in which State does the former employer have its principal office?  (That question is a proxy measure that might help uncover a law or choice about which State’s law might govern the former employer’s retirement plan.)

 

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Sounds like what you're trying to do is a contract exchange (when funds are moved from one payroll slot provider to another payroll slot provider but the funds are still governed by the 403b plan document of your employer). If that is accurate, then the plan admin can determine the payroll slots and if that payroll slot vendor is no longer available, in this case Lincoln is no longer available, then you cannot do a contract exchange even though they were a previous payroll slot vendor. Hope this helps.

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Thanks for the comments…

The Lincoln Financial representative tells me that other employers allow transfers into Lincoln Financial when Lincoln Financial is the former 403b administrator plan (payroll slot provider). 

Making a former contract unavailable seems to be an arbitrary decision.

Is there legal precedent for making an ‘unavailable’ contract ‘available’? Or does that violate ERISA rules somehow?

Will I be able to find an ERISA lawyer to represent me?

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I do not think this is a rollover or a potential rollover, nor is it a contract exchange (not about payroll slots).  It is a potential transfer between vendors to this 403(b) plan.  The answer should be in the plan document.  If Lincoln is not listed as an Approved Vendor,  you are out of luck.  I think a lawyer is a waste of money.  There is no "right" to transfer funds to an Unapproved Vendor.  This is a decision entirely in the plan sponsor's control.  There would be many aspects of the Lincoln contract that would support the plan sponsor's decision to not allow transfers or contributions to those old contracts.  Excessive termination penalties would be one of them.

BTW, the Lincoln people were out of line with the IRA advice.  They clearly did not know what the rules were.  You would like to take advantage of one aspect of an old contract that funded the plan awhile ago.  I understand that, but you do not have a "right" to do this.

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Thanks for the insightful comments…

If I’m still looking to challenge my former employer’s 403(b) vendor transfer denial is there an attorney in the Southern California area that may be willing to represent me?  I would think this could be a potential class action situation as I’m probably not the only affected employee, past or present that has a similar case.

And an attorney to review the plan document to determine if Lincoln could be interpreted as an Approved Vendor. 

From a lay persons (me for instance) point of view prohibiting the transfer makes no sense.

It’s not clear to me what the many aspects of the Lincoln contract that would support the plan sponsor's decision to not allow transfers or contributions to those old contracts.  And what excessive termination penalties means.

I think I should have the ‘right" to do this.

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