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I was wrong. What the IRS says doesn't really matter, but the DOL has said that terminating a 403(b) plan does not jeopardize the non-ERISA status of the plan. See the last paragraph in the Analysis section of Field Assistance Bulletin 2007-2, located at http://www.dol.gov/ebsa/regs/fab2007-2.html. Maybe someone else wants to take a crack at the questions in the original post and get this thread back on track. I'll let someone else go first: I think my credibility may be shot for this thread!

I respectfully disagree w/ the conclusion that a non-ERISA 403(b) plan cannot be terminated. From the preamble of TD 9430: "Termination of a Section 403(b) Plan The final regulations adopt the provisions of the 2004 proposed regulations permitting an employer to amend its section 403(b) plan to eliminate future contributions for existing participants, and allowing plan provisions that permit plan termination and a resulting distribution of accumulated benefits, with the associated right to roll over eligible rollover distributions to an eligible retirement plan, such as an individual retirement account or annuity (IRA). Comments on the rules in the 2004 proposed regulations regarding plan termination were favorable. In general, the distribution of accumulated benefits is permitted under these regulations only if the employer (taking into account all entities that are treated as a single employer under section 414 on the date of the termination) does not make contributions to any section 403(b) contract that is not part of the plan during the period beginning on the date of plan termination and ending 12 months after distribution of all assets from the terminated plan. However, if at all times during the period beginning 12 months before the termination and ending 12 months after distribution of all assets from the terminated plan, fewer than 2 percent of the employees who were eligible under the section 403(b) plan as of the date of plan termination are eligible under the alternative section 403(b) contract, the other section 403(b) contract is disregarded. In order for a section 403(b) plan to be considered terminated, all accumulated benefits under the plan must be distributed to all participants and beneficiaries as soon as administratively practicable after termination of the plan. A distribution for this purpose includes delivery of a fully paid individual insurance annuity contract." Note that nothing in this nor in Reg 1.403(b)-10(a) precludes a non-ERISA plan from being terminated.

Stolen from a similar post on the COPPA Board, but I thought it was appropriate: The IRS has made me remove the Circular 230 notice it formerly made me put here. Under penalty of law you may not rely on, and no inference may be drawn from, the fact that I have deleted the Circular 230 notice the IRS used to make me put here but has now told me not to put here. Further explanation of this notice of non-notice is available at my usual hourly rate. Personally, I never put it on anything in the first place because I thought it was stupid. But that is just the rebel in me, I guess. It is nice to know the rest of the professional world has come around and realized it.