dixieandruby

Sponsor maintains 401k and 403b. All employees in controlled group are employed by nonprofits. Sponsor wants to terminate 401k and force nonresponsive participants to direct rollover to 403b. Or alternatively to force direct rollover to safe harbor IRA. Is force out available at all here? 1.411(a)-11(e) says no force out if another defined contribution plan in controlled group other than ESOP. Is 403b plan considered another defined contribution plan for this purpose? 414 definition suggests yes? It seems like a catch 22 - can’t force to IRA and can’t transfer to 403b as that isn’t allowed. Maybe the 403b is not a defined contribution plan and so we can force out to an IRA? But I can find no path or support to forcing a direct rollover to the 403b. Maybe a “transfer” where 411d6 is honored, but again - can’t transfer 401k to 403b. Help…

Thanks AndyH. This seemed strange to me as well.

Tax-qualified defined benefit plan offers early retirement distributions (age 55-64). NRA is age 65. Plan provides that if participant terminates and commences early retirement distribution, if upon reemployment before age 65, participant desires to continue receiving distributions, participant must waive (in writing) opportunity to earn future accruals on service earned between reemployment and eventual final retirement, in which case his initial distributions continue unchanged with no additional accruals or further adjustment to his payments. Is this participant waiver of additional benefit accrual in exchange for continuance of pension distributions (during reemployment) permissible? If the person does not waive the additional accruals, his pension benefit is "suspended" during the reemployment period and then resumes at eventual retirement, adjusted to reflect additional accruals earned during reemployment along with any required actuarial adjustments. Many thanks.

Large nonprofit health systems are being approached frequently by consultants offering proposal to rescind executives 409A/457(f) SERPs in direct exchange for split dollar loan regime arrangement of substantially equal value (but generally a very different "payment" time/form than under the 409A/457(f) SERP). Push for these proposals now seems to be to help nonprofit employer avoid or reduce 4960 excise taxes where these SERP values would exceed $1M at vesting. Anybody seeing these along with the legal opinions from the promoters that these "swaps" "should not" run afoul of 409A or 457(f)?? Thoughts on whether this violates anti-substitution/anti-exchange rules under 409A/457(f) and if not - why? If an executive and employer bilaterally agreed to cancel SERP in exchange for loan regime split dollar arrangement, should executive insist on indemnification from employer for potential 409A/457(f) infractions/penalties if the promoter's "should be ok" doesn't ultimately align with IRS views on audit - or even at Tax Court? I appreciate any insight as to how these proposals are being greeted by employer's counsel.