From 403b plan to a 457 plan

[Guest Mike Moore]

Does anyone have any experience with moving a 403b over to a 457 plan? What are the conseqeunces and costs? How difficult is it? Thanks.

[Carol V. Calhoun]

It gets a bit complicated. First, although rollovers from a 403(B) plan to a governmental 457(B) plan are now permitted upon termination of employment, in-service transfers are still not allowed. Thus, the old money would have to stay in the 403(B), and only the new money could go into the 457(B).

Also, a termination of a plan is not a distributable event under 403(B), even though it can be under certain other types of plans. Thus, you definitely could not distribute cash from the 403(B) plan. There have been some prior discussions (you might use the search function on this board to find them) of the extent to which you might be able to distributed individual annuity contracts.

Note: After writing the above, I saw your post on another board that suggested that the employer was ineligible to establish a 403(B) plan. If that is the case, the plan is not and never has been a 403(B) plan, so all rights under it would be determined purely in accordance with state law. However, transfers to the 457(B) plan would be treated as if they were new contributions to that plan, so they would be impermissible to the extent they exceeded the otherwise applicable limits on contributions to a 457(B) plan.