403(b) discontinuance a distributable event?

[R. Butler]

Employer has a 403(b) and a Profit Sharing Plan. Employer is considering discontinuing the 403(b) plan and adding a 401(k) provision to the Profit Sharing Plan. If the employer does this can the 403(b) monies be rolled into the 401(k)? It seems to me that the answer is no; the discontinuance is not a distributable event, but then again I know very little about 403(b)'s.

Thanks in advance for any guidance.

[jevd]

Its my understanding that you still need a distribution event and plan termination or discontinuance of contributions is not a distribution event.

[mbozek]

RB: Why does the ER want to substitute a qualfied plan with higher admin costs / qualification/ ADP testing issues for a sal reduction 403(b) plan which permits all HCE to defer up to 12k (and 3k more in the case of some NP) without being subject to qualification requirements? There is no rollover option to a 401(k) plan in the event of termination of the 403(b) plan because there is no distribution of 403(b) assets.

[R. Butler]

Thanks for all of the replies. It seems that the discontinuance of the 403(b) is not a distributable event.

mbozek,

They are not necessarily going to terminate the 403(b) they are just considering all possibilities. The rollover issue was a question their CPA had if they do decide to go this route. Actually they would add a safe harbor 401(k) provision to their existing profit sharing plan. We don't handle their profit sharing plan, but depending on their administrators fee schedule there may not be any addiitonal cost, other than an amendment, but thanks for the advice.