403 B Plan termination

[PS]

I'm assisting with the 403 B plan termination for the first time, this has a GCA ( Group Custodial Agreement) how different is the termination process? What are the keys factors that I will need to look into it. 

There are participants who have outstanding loans, when a 401K plan terminated the participants will be allowed to roll over the loans into the acquiring company plan how does it work with 403 B GCA( Group Custodial Agreement)? 

• Can funds be liquidated and cashed out? 
• Can the funds be rolled over only to a retirement plan or can it be rolled over to an IRA? 
• For non-responsive participants - Generally when a 401k plan terminates participants are given at least 30 days to make/take distribution of their choice, what is the time period provided for participants with 403 B? can the funds be rolled over to an IRA if they don't respond? 

Any material that I can refer?  

[Patricia Neal Jensen]

First step would be to make sure someone knowledgeable has examined the annuity contract's (Assuming this "GCA" is an annuity contract)  termination process and rules and/ or discussed this with the issuing insurance company.  A significant difference between this and a 401(k) termination is the extent to which you must deal with the annuity contract.  Get a good contact at the ins. co. and establish a working relationship with them.

The challenge in some (most?) 403(b) terminations is that the assets must be paid out within 12 months.  Since many of these contracts require Participant consent to payout, regardless of whether or not it is a group contract, this can be a significant problem.  If the annuity contract requires Participant consent to pay out, you may not be able to do a default payout for a non-responsive Participant.  In some situations, you may be able to get the insurance company to "payout" the annuity contract without cashing it out.  This is possible because the payout of an annuity contract as a whole is not a taxable event; only distributions from the contract are taxable.

The loan issue should be resolved by examining the existing plan and contract that the Participant is in now and the Plan the participant is joining which may or may not accept a loan transfer. 

Review Rev. Rules 2011-7 and 2020-23 for IRS guidance.  Also a good source in groom.com/resources/irs-guidance-provides more detail on terminating 403b plans

[PS]

Thank you