Title I to Non-Title I plans

[Felicia]

If the document allows an employer to effectuate a transfer, can an employee transfer money from a Title I Plan to a non-Title I plan WHILE: the employee is still employed, is not eligible for a distribution of the monies (I.E., IS NOT 59-1/2)and is still making contributions to the Title I plan? CITES WOULD BE VERY HELPFUL.

[Carol V. Calhoun]

Yes. See Rev. Rul. 90-24, 1990-1 C.B. 97, which indicates that this will not be considered an impermissible distribution.

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Employee benefits legal resource site

[pjkoehler]

Rev. Rul. 90-24 holds that a transfer of an interest in a section 403(B)(1) annuity contract to another 403(B)(1) annuity contract or to a section 403(B)(7) custodial account subject to the early distribution restrictions you mentioned will not be a taxable transfer. Your question, however, raises an ERISA Title I issue, with respect to which IRS pronouncements are not relevant. To the extent that the transfer takes place as a form of distribution provided under the transferor plan and elected by the participant, the mere fact that the participant chooses to deposit the proceeds of the distribution under another plan that is not covered by Title I, raises no Title I issues. However, to the extent that plan fiduciaries direct the transfer in the exercise of the discretion that makes them fiduciaries, it could raise an ERISA anti-inurement, a prohibited transaction or other fiduciary liability issue. This is kind of a stretch. It's probably worth a little research. If you can't find any guidance, it might be worth calling the local office of the PWBA and seeing if you can elicit an informal staff comment before proceeding. This is only slightly grey, but in the abstract you can't really say it's without doubt.