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403(b) direct tranfer


Guest bgholtz

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Guest bgholtz

I would like to make a direct transfer of existng funds in my 403b account under rev.rul.90-24.The company holding the funds and the new company to which they are being tranferred agree that it is pemissible under rul.90-24.The plan administrator at my employment has to sign the tranfer form.The consultant that my employes uses, has told my employer not to sign the form. They say it is illegal to make a direct transfer involving 403b plans when it is not made to an employer approved vendor.If they were a vendor i would already be putting my money there.What can I do? The companies invoved are TIAA_CREFF and MET LIFE.

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Mike, I appreciate your excellent applification.

Additionally, a 90-24 transfer is NOT a statutory right. The Plan Document is the controlling authority. The Plan Sponsor, therefore, through the Plan Document may allow or disallow 90-24 transfers whether or not the 403(B) arrangement is an ERISA plan.

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Guest mike webb

I agree that the consultant is incorrect to state that it is "illegal" to make such a transfer, but there may be another issue here. I suspect that, since your plan administrator must sign the transfer form, that the 403(B) arrangement is subject to ERISA. Governmental (such as public school) and church plans are not subject to ERISA, but many 501©(3) organizations, such as hospitals, foundations, and museums, are subject to ERISA requirements. A 403(B) plan maintained by a 501©(3) organization is subject to ERISA if it a) provides for employer contributions, or b) does not meet the DOL requirements for exemption under DOL regulation 2510.3-2(f).

If your arrangement is subject to ERISA, your employer's plan could prohibit 90-24 transfers to other 403(B) arrangements. In addition, if the transfer was being made to an arangement that was not subject to ERISA, such a transfer might be similarly prohibited. The reason for such a prohibition is that an employee, in theory, could circumvent the spousal consent requirements of ERISA by simply transferring the assets of his/her 403(B) plan to an arrangment that is not subject to ERISA and subsequently making a permissible distribution from the Non-ERISA arrangement without the consent of his/her spouse. Unlike ERISA 403(B) plans, Non-ERISA 403(B) programs do not require the consent of a spouse when a distribution is made. Again, none of this applies if you are employed by a public school or a church, or your plan is otherwise not subject to ERISA requirements.

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Mike W.

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It would not be illegal under federal law to make the transfer. However, if yours is a governmental plan, it may be illegal under state or local law. It is quite common to have state or local 403(B) plans limit the contracts to which transfers can be made. The reason for this is that the employer often wants to impose standards on the 403(B) carriers (e.g., requiring that they properly calculate maximum contributions, or make adequate disclosures to employees. These standards become meaningless if employees simply have money contributed to an approved carrier, and then immediately transfer the money to a nonapproved carrier.

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The opinions of my postings are my own and do not necessarily represent my law firm's position, strategies, or opinions. The contents of my postings are offered for informational purposes only and should not be construed as legal advice. A visit to this board or an exchange of information through this board does not create an attorney-client relationship. You should consult directly with an attorney for individual advice regarding your particular situation. I am not your lawyer under any circumstances.

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Guest bgholtz

jlf let me give some more details.I do not no if is an erisa covered plan :however my wife signed and had notirized the direct transfer application.I work for the association for the help of retarded children, a not for profit facility.The consultant said I could not transfer the funds because the 403b plan with TIAA CREF is not a plan approved by my employer,and only transfers can be made to an approved plan. he told my employer that it is illegal for them to sign the tranfer form.i suspectthe teh consultant is afraid of losing his commission as many people will follow me to the exit.i will continue to make 403b contributions to Met LIFE as they are are only current option.i plan on asking the consultant to put in writng the details of what law would be broken by my employer.I would like to thank everyone who has been giving me help thus far. I also need to know if there is something else i shoud be doing>

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bgholtz: Is the "consultant" a commissioned salesperson representing the Met? I suspect he is. The Met distributes its products through a commissioned sales force. Assuming this is the case, then he is surely attempting to save your account. TIAA-CREF is a no-load firm.(no commissioned sales force)

I would communicate directly with an executive of the Met. Ask him for the company's official policy in writing. This policy can also be found in the annuity contract you signed with the Met.

The consultant works for the Met. He should be stating the company's official position. Not one he would like them to take!

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Guest mike webb

Again, I am in agreement with jlf. In addition, I would get a statement in writing from the plan sponsor as to why your request has been denied, since it appears that your plan is subject to ERISA. What leaves me to believe that your plan is subject to ERISA is the fact that you only have one plan vendor (most 501©(3) organizations of your size would normally require mutliple vendors to meet the DOL exemption from ERISA under 2510.3-2(f))and that spousal consent was obtained for the 90-24 transfer (though such consent is unnecessary for 90-24 transfers, such consents are unique to ERISA arrangements). Also, my experience with ARC's (which, by the way, are not governmental organizations that would be automatically exempt from ERISA) are that such firms typical make employer contributions into the 403(B) plan, which would automatically make the arrangement subject to ERISA. Unfortunately, if the plan is subject to ERISA, the plan document, as jlf pointed out, could expressly prohibit such transfers. Thus, I would obtain a copy of the plan document or Summary Plan Description (SPD) from your employer. If the transfer is prohibited by the document (which I suspect it is, due to the ERISA transfer to Non-ERISA issue that I addressed in my previous reply), your 90-24 transfer to TIAA-CREF is indeed invalid, but all may not be lost. It is possible that some of your funds may be eligible for movement to TIAA-CREF via what is known as a direct rollover. If your plan has employer provided contributions that may be withdrawn for any reason (see your plan document for details), you have pre-12/31/88 voluntary salary deferral contributions, or you are age 59 1/2, you are a candidate for such a direct rollover of at least some of your funds.

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Mike W.

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Guest bgholtz

jlf& mike.Thank you for your help.I have now asked the consultant to provide written info. on what law my employer would be breaking by signing the transfer form.He has agreed to send me same.I believe that the consultant was hired by AHRC to calculate 403 participants contributons so that there would be no excessive contributions made by employees.Howeve the consultant I believe is the one who set up the 403b account with MET and AHRC.He I am sure he is getting a commission from MET.It is now obvious to me that this account was set up for his benefit and not to the benefit of AHRC employees.There are much better options out there(ie TIAA-CREF).But the consultant could not make a living that way.Either my employeer is naive or there is some sort of relationship between them and the consultant.I believe it is the second reason.I have also asked AHRC for the complete plan decription to see if this transfer is prohibited in this document.I should also note that many employees have written to management about offering additional options for our 403b funds.These pleas have fallen on deaf ears.This has also made me suspect of Ahrc and the consultant.Thanks again

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