403(b) plan terminations?

[Guest jppcpa]

I was recently told by a plan administrator that it is not possible to terminate a 403(B) plan! In this case, a church-sponsored plan has stopped using their 403(B) and adopted a 401(k) plan. The participants were only allowed to roll accounts to annuity contracts and not to rollover IRAs. The reason given was that it was not possible to terminate the 403(B) plan and none of the other qualifying events had taken place (separation from service, etc.) I don't work with 403(B) plans, but this seems pretty strange.....you can start a plan but never terminate it? Any comments and cites appreciated.

[Guest PeterGulia]

A 403(B) contract permits a distribution only upon separation-from-service or another specified distribution event. IRC 403(B)(7)&(11).

Unlike 401(k), Section 403(B) has no provision recognizing termination of a "plan" as a distribution event.

When making the Technical Amendments Act of 1958 (which created IRC 403(B)), Congress did not contemplate the possibility that charitable organization employers would create "plans" that might need to be discontinued or "terminated". In 1958, tax deferred annuity arrangements had no provisions to be administered beyond those stated by the annuity contract. Perhaps that's also true of the church plan you describe.

------------------