KaJay

We have an employer with 100% of employees in its 403b plan that is considering terminating the 403b plan in order to accomplish two things: 1. Start up with a new 403b 2. Provide access to cash for one of the employees My understanding is that a termination results in a distributable event for employees, where they can either get the cash or rollover to another institution. If a rollover to another 403b is possible, don't the regulations state that the employer cannot participate in another 403b for 12 months starting the date the funds are liquidated due to termination? Meaning the funds that make it to the new 403b institution will need to just "sit there" for a year and employees will lose out on contributions that would have otherwise been sent to the initial 403(b). Is my understanding correct?

Background Participating Employer-A of a 403(b)(9) non-electing [multiple-employer] church plan sent both EmployEE and employER contributions to the Plan for an individual who is not enrolled in our Plan under that employer. The funds came to the plan with remittance instructions while the employer and employee were working to get the employee enrolled under Employer-A. The Plan does not have an auto-enrollment provision but does require enrollment paperwork be processed before it accepts any contributions - for whatever reason, the employer sent the funds anyway. The employee has since decided not to enroll in the Plan under that employer. He is, however, enrolled in the same Plan under a different employer, Employer-B. Meaning, he works for two different participating employers. Question If he is not enrolled in the Plan under Employer-A, are they even considered retirement plan contributions? What are the Plan's options from here? Employer-A wants us to send all the funds back to them. My understanding is we must keep A's employER contributions in the Plan which will be used to offset future employER contributions for its enrolled employees. We are unsure if the money sent to us as "pretax deferral contributions" should be distributed to the employee (per usual) or if some other type of arrangement could be made.

BACKGROUND: 403(b)(9) non-electing church plan offers an in-plan annuity. In the absence of a Form W-4P, the default withholding for annuities initiated prior to 2022 has been "married with 3 allowances". It is my understanding that the Plan must notify annuitants annually of their right to elect withholding that differs from this default rate. QUESTION: For these pre-2022 initiated annuities, is the Plan able to continue withholding at the old default rate of "married with 3 allowances" indefinitely, for annuitants that never submit Form W-4P in future years?

Peter, even the language in the hyperlink you furnished is confusing to me. Sorry this taking me awhile to fully grasp... Because an employee with a 430(b) is [always?] considered the "employer", in what instance would employer contributions made to two different 403(b)s in the same calendar year - one with the current employer and one of a previous employer - not be aggregated for purposes of the 415c limit?

This is quite confusing! I also took a look at Pub 571 and it stated that 403(b)s of unrelated employers do not get aggregated, but if 403(b)s are to be recognized as it is the individual that is the employer, then it seems like two 403(b)s of "separate employers" could never happen. My brain hurts. : ) Pub 571 https://www.irs.gov/pub/irs-pdf/p571.pdf 3. Limit on Annual Additions The first component of MAC is the limit on annual additions. This is a limit on the total contributions (elective deferrals, nonelective contributions, and after-tax contributions) that can be made to your 403(b) account. The limit on annual additions is generally the lesser of: • $57,000 for 2020 and $58,000 for 2021, or • 100% of your includible compensation for your most recent year of service. More than one 403(b) account. If you contributed to more than one 403(b) account, you must combine the contributions made to all 403(b) accounts maintained by your employer. If you participate in more than one 403(b) plan maintained by different employers, you don’t need to aggregate for annual addition limits.

So, it is never based on the plan type (two 403b's with two different employers, for example), it is always based on it being two (or more) unrelated employers. Correct?

If someone changes employers mid-year, do the employer contributions made to his DC plan with his first employer get aggregated with the employer contributions made by his new employer's DC plan when considering the 415c limit OR is the 415c limit separate for each employer?

Is there a rule regarding the distribution order, based on fund type, for hardship withdrawals? In the case of hardship, the Plan allows for distribution of all employer contributions plus earnings, as well as pre-tax and Roth employee deferral contributions (no earnings). So, if a member has a combination of employer contributions and pre-tax and (non-qualified) Roth deferral contributions, is the Plan required to distribute the available fund types pro-rata, or can the Member choose from which contribution type(s) he/she wants distributed?

Background: 403(b)(9) Non-electing Multiple-Employer Church Plan A church mistakenly sent employer contributions to the plan for two terminated employees. This church did not intend to provide post-employment contributions and is asking the funds be returned. Generally, when the plan receives an employer contribution that is in amount higher than intended, it applies it to another employees(s) of the employer for a future contribution, but these were the church's only two employees in the plan. The church intends to hire someone, but timing is uncertain. Can the funds be returned to the employer, or must they stay in the plan for a future contribution since the church intends to stay in the plan.

Background: Susan dies and has left her 403b to a specific "Ministry A" within a religious denomination. The named "Ministry A" no longer exists. In the words of the religious denomination: "Ministry A" is now "Ministry B" - a likeminded ministry who also serves the mission of "ministry A". To my knowledge there was not a formal merging of entities but rather maybe a reorganization in which Ministry A dissolved and Ministry B took over some of roles of Ministry A. Susan never named a contingent beneficiary. In the absence of a living/existing primary beneficiary and there is not a contingent beneficiary, the Plan's default is to push to the estate. Question: What does the plan need to know about Ministry B to determine if it can serve as the beneficiary of Susan's account?

Yes. The 401(k) can be terminated and they can start a 403(b).

I am also curious, if the 403(b) pushed the $4000 IRA RMD out to the participant, is coding it as an excess contribution even correct?

They do not have another IRA. Also, the IRA firm will not provide a Letter of Acceptance (LOA) to the 403(b) firm. Can the 403(b) push it back without a LOA?

A participant did not remove his 2019 IRA RMD prior to the rollover to his 403(b) earlier this year. Approximately $4000 was not eligible for rollover. I understand the 2019 IRA RMD cannot be satisfied by simply cashing it out of the 403(b), but can the IRA RMD amount be treated as an excess in the 403(b) and pushed to the participant that way? That is how the sending firm wants it to be treated. Would treating it as an excess also satisfy the IRA RMD? I am not familiar with treating RMD amounts as excess and could use some guidance. TIA

Thanks for your input, Bird!

So....Edward Jones has not provided the 2019 IRA RMD amount they erroneously included in the rollover to the 403(b). It was requested that EJ send the 403(b) a letter that states the amount that was not eligible for rollover (the 2019 IRA RMD amount). They have refused to do so. The 403(b) plan, not knowing what portion of the rollover was ineligible is going to send the full amount of the rollover (plus earnings) back to the IRA. The participant is not required to receive an RMD from the 403(b) due to the still working exception. Does the 403(b) code this transaction of sending all the funds back to EJ as a rollover? I am wondering what code would be used on the 1099-R.

That's a good idea, Larry Starr! I did not even think about that. Thank you for your insight.

Thanks for your reply, Lou S. I agree, this presents some challenges since cooperation by both the participant and EJ is necessary. If the parties do not work with the 403(b) on this, is there any risk to the 403(b) by keeping those funds in the Plan/the Member account? Does the 403(b) need to take any specific action?

Participant turned 70 1/2 in 2019. Participant rolled over his Traditional IRA to his Employer's 403(b)(9) in April 2019. The IRA custodian did not remove the participant's 2019 RMD amount prior to the rollover to the 403(b). The participant is requesting his IRA RMD from the 403(b) because "Edward Jones said he could do it that way". (sigh) He has no other IRAs to aggregate and pull the 2019 IRA RMD. I realize that an IRA RMD cannot be taken from a 403(b) but I am curious, what is the next step here? TIA for you comments.

Thanks for your response, Ellie. I agree that the UA rule does not apply to churches and QCCOs. This is not about UA. The church has a responsibility to offer plan participation to those that are eligible for deferral or any other type of contribution. I can understand your confusion with the standard UA language of "20 hours per week..." as it parallels the 20 hours per week eligibility criteria within the church's written plan doc. For this particular plan, it has to do with a default class for participation specified in the plan doc that all churches in the plan are subject to if they do not specify otherwise in their adoption agreement. Thanks again for taking the time to read and respond to my post.

Thanks for all of your responses!

I am working with a church that is in the midst of an EPCRS correction. One of the areas they are working to correct is failure to offer participation in the plan to all eligible employees. Per the written plan document, part-time employees must be offered participation. They are looking at needing to provide a 1.5% corrective contribution on behalf of these PT employees. The question the church has proposed is, "what if an employee refuses the corrective contribution?". Because they were never offered an opportunity, these part time employees are not enrolled. If refusal is not an option, and an employee is unwilling to complete an enrollment form, can the church just provide the plan with the basic enrollment information (name, ssn, dob, etc.) so the plan could open an account for the individual to accept the contribution on the employee's behalf? If refusal is an option, could the church simply receive a signed statement from the employee in order to justify not making a "full correction"? TIA for your responses.

There are no employment contracts or offer letters, just a statement that "all employees are eligible to participate in the retirement plan" in a section of the personnel manual (1998) - of which I believe has just sat dusty on a shelf and not referred to since its creation 20+ years ago. The only other mention of eligibility is within the 2009 plan document.There have been no amendments between 1998 and 2009. Based on the responses from david rigby and QDROphile, it seems as though there may be a stronger argument to use the plan document's criteria for eligibility.

An employer's personnel manual (dated 1998) states all employees are eligible to participate in the 403(b) plan. The same employer's plan document (2009) provides a default eligibility for employees working at least 20 hours per week. For employees working for the employer 2009 and beyond, which document governs participation eligibility? TIA for your responses.

Ellie, I am aware that churches are not subject to UA, as mentioned in my first post of this thread. Churches are subject to the terms of their written plan document, however, and their document established participant eligibility at 20 hours per week.