403B$$ move to a 401K

[Guest blb]

My employer, with a 403B plan, was just taken over by a

for-profit company, with a 401K plan.

Can I move the 403B$$ into the 401K plan??

Thanks...........

[Michael Devault]

Sorry, not under current law.

Last year's proposed tax bill contained provisions that would have permitted such a transfer. And, it may re-surface in this year's tax legislation.

Hope this helps.

[Guest D Ledden]

Is this still the case? An employer cannot start a 401k plan and merge all 403b assets into the 401K?

Thanks

[Michael Devault]

Yes, its still the case.

In order for the 403(B) assets to be merged, it would require that the 403(B) plan be terminated. There is no authority or procedures for terminating a 403(B) plan.

Hope this helps.

[BFree]

How does a 403(B) plan go away, then?

[Michael Devault]

I'm not sure if it ever goes away. However, in the instances I've seen, the employer simply stops making contributions and freezes the 403(B) plan. This seems to do the trick for all practical purposes.

I would guess that when all participants with frozen accounts retire or die, the plan goes way for good. But that's just speculation on my part.

[mbozek]

There is no formal procedure for terminating a 403(B) plan because there are no assets held in trust which need to be distributed-- all assets are allocated to the participant's accounts. (I dont know how forfeitures in a 403(B) plan are treated.) Generaly a 403(B) plan is terminated by passing a board resoluton, filing a final 5500 for the plan, distributing a smm and, if subject to ERISA, a 204(h) notice.

[Guest Aberlaine]

I'm confused. I thought when EGTTRA was voted into law on January 1, 2002, it allowed 403(B) funds and 401(k) funds to be co-mingled. Also, we have a 401(a) pension plan and we've been rolling over the benefits from that plan to other qualified retirement funds since the beginning of the year.

[MGB]

EGTRRA did not allow the transfer of funds between these plans. What it did allow is to do a rollover between plans. In order to have a rollover, there must be a distributable event. The most common distributable event is termination of employment. Another is the termination of a plan (e.g., when a defined benefit plan is terminated, the participants can roll over their money to another plan). However, given that you cannot terminate 403(B) plans, the only regular distributable event to be able to move 403(B) money is termination of employment.

If mbozak is correct, and there is a way to terminate these contracts, then there could be a rollover, but I don't think the law lists this as a distibutable event.

[Guest Aberlaine]

Thanks for clearing transfers up for me. You're right, I've only dealt with roll overs when employment has been terminated.