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I'll repeat my concerns stated earlier about the language in the bene des. If it refers to the policy directly, she could be ceding money by having the plan take some out via loan. The whole scenario is obviously ill-conceived and needs way more care than can be provided by us throwing ideas around. Not that any of the ideas are bad but I sense some other crap bombs here.

No OE exclusion for TH purposes. Dual eligibility is a trap for TH 401(k) plans. Just say no.

The plan could provide for participant individual brokerage accounts as an investment option. Schwab has PCRA accounts that would let him play with his money as do other mutual fund houses.

No the QDRO is not being paid to me because of my disability. It's flat out a result of a divorce settlement/time frame from way back before my disability time frame even started. I so hope you all are right. I hate to have to get a lawyer involved. I will wait and see what the LTD company decides first before engaging a lawyer. I have no problem using one if I have to though. I had to use one to fight them on an initial disability decision and we won the case against them. It was an odd situation. I won Social Security but my company LTD turned me down for coverage so I had to take them to court. I will keep you posted on what happens.

Bill types faster than I do.

now you are beginning to get bad like I do and sometimes missing stuff when reading the question! trying to get to that magic 3000 posts? I think Dave gives out 3000 hit club T-shirts for that, but only if you are on his 'good' list.

It's an impossible battle! But it's worse when a co-worker, who should know better, does it.

Almost every one of my clients with a non-elective safe harbor calls it a match and I am always reminding them to STOP DOING THAT, but it doesn't seem to have any holding power... I would not worry about what it is called; it matters what it actually IS. For example, we ALL talk about 401(k) plans as if they exist, when really they are all profit sharing plans with a cash or deferred election. Yeah, there is no such thing as a 401(k) plan, but try to make stick! :-) As long as the plan language allows for what the employer is doing, they can call it anything they want so long as they don't mis-explain what they are doing (ERISA rights can attach to explanations that are in error, so it does matter how they actually explain it, even if they use the word "match"). Hope that helps.

1. Terminating a 403(b), although possible, is not easy. I suggest reading everything you can find on this subject before you begin. The biggest stumbling block is that all plan assets must be paid out within 12 months of the termination date or the termination will be retroactively disqualified (and you will have impermissible distributions by the 403(b) either spent or rolled over by the accounts which did distribute). Whether or not the plan sponsor can control asset distribution without participant consent is a material issue in these situations. You did not say how the 403(b) is invested, but individual annuity contracts would have to be distributed by the issuer and mutual funds, if this is a 403(b)(7), present another set of challenges. If this process is done incorrectly or without regard to proper timing, your client will have two ERISA plans and one will have made improper distributions in violation of the document and of the law. www.irs.gov/retirement-plans/irc-403b-tax-sheltered-annuity-plans-terminating-a-403b-plan; www.plansponsor.com/properly-terminating-a-403b-plan/ And now your client has traded "no deferral testing" for "annual deferral testing" in order to get a 6 month eligibility. Unless the census population makes this an audit or no audit situation, I think this plan of action is one the client will regret. 2. 401(k) will be 002 3. The 401(k) effective date would be whenever the plan can actually permit deferral contributions. Not January 1, 2018. The effective date of the 401(k) is not the "original effective date" of the 403(b). 4. The loan rollover issue is one which would be addressed in the respective documents. If the 403(b) plan document says that all loans are due and payable upon plan termination (which is what most would say), then they are due and payable, etc. I have not researched this for technical/ legal issues but would believe that the respective plan documents can or must deal with this. 5. The issues surrounding vesting of the match or other employer contribution in the 401(k) will be addressed in the Adoption Agreement for the 401(k) (or equivalent document). If service credit for vesting is to start with the 401(k) plan effective date, select the choices in the 401(k) document which say that. 6. Whether employees have to be otherwise eligible to make rollovers into the 401(k) is, again, a document issue. Most documents require a choice to be made and one of the choices is "all employees regardless of eligibility." 7. As indicated above, years of service credit for vesting will be determined by the choices you make as you prepare the 401(k) document. This issue is unrelated to whether or not an employee rolls over his or her 403(b) balance. All assets in the 403(b) will be 100% vested when this 403(b) plan is terminated, but this is not indicative of the vesting of new employer contributions into the 401(k). 8. Among the other issues this project presents is the PPA restatement of the 403(b) plan document. Although not due until March of 2020, the 403(b) document the client is using now may not have an IRS letter. Prudence would indicate a document restatement prior to the plan termination so that the 403(b), if later challenged, would have an IRS letter. 9. I am assuming that you and your client understand that you could easily have the 6 month eligibility for employer contributions in the 403(b) plan. Only the opportunity for employee deferrals has to be immediate. I suggest making a list of all the steps which will have to be taken to do this and another list of all the " pluses and minuses" and then sitting down and going over all of this carefully with your client. Adding the testing of deferrals to the administrative burden for a plan is a significant step, and the actions which must be taken when and if testing fails are sometimes a shock to employers. Unless this is the difference between an audited and an unaudited plan, I do not see what could be gained by this change which will make it worth all the work and the other hazards of its undertaking.