rule 90-24 clarification

[Guest yanfan]

I've posted before and have appreciated all of the comments and suggestions. I currently make transfers once a year from my TSA at AXA Equitable to a 403b(7) account at Fidelity; I have been doing this for several years. I know the ability to make these transfers will end in January, 2007 if the current timetable for the proposed legislation holds. In the future if I want to transfer the existing funds from Fidelity to another vendor will I be able to or does the elimination of the 90-24 rule mean that the funds must stay at the previous vendor (in my case, Fidelity)? Thanks for taking the time.

PS I'm also in the process of trying to lobby my district get Vanguard on our approved list of vendors.

[MWeddell]

Regulations are in proposed form only, so the content and effective date of the final 403(b) regulations is not known. In other words, regard my answer as tentative because it's subject to change.

Right not it appears that you probably can exchange your AXA Equitable contract for a Fidelity contract only if the Fidelity contract is within the plan of your current employer. If your employer doesn't include Fidelity as a permissible 403(b) vendor, then you're not going to be able to transfer assets to Fidelity after 12/31/2006, when the regulations are expected to become final. There are some conditions that apply, so even the limited transfer capability that I'm describing isn't a sure thing.

[Guest yanfan]

Thanks for the reply. I'm still not sure how the proposed changes may affect money that I have already transferred. I won't be able to transfer new contributions from Equitable to Fidelity since Fidelity is not on our approved list; however, if I decide in the future I want to move money already transferred to Fidelity to another vendor not on the approved list will that be permissable? Also, any idea when all these issues will be ironed out? Thanks again!

[MWeddell]

if I decide in the future I want to move money already transferred to Fidelity to another vendor not on the approved list will that be permissable?

It's not clear from the proposed regulations, but my reading is no, this would not be allowed under the proposed regulations.

Also, any idea when all these issues will be ironed out?

The IRS is aiming for the end of June but (i) it hasn't communicated anything that even sounds like a firm commitment yet and (ii) the IRS' record of issuing the proposed or the final 403(b) regulations shows that they miss their deadlines a lot. I don't mean to bash the IRS because they are better at meeting their goals elsewhere. Seems to me that 403(b) regulations only affect a few industries and it's easy for this project to get bumped down their priority list.

The IRS is more clear in saying that the effective date should be January 1, 2007 (originally it was going to be January 1, 2006), so final regulations as late as September 30 wouldn't be too big of a surprise.

[joel]

if I decide in the future I want to move money already transferred to Fidelity to another vendor not on the approved list will that be permissable?

It's not clear from the proposed regulations, but my reading is no, this would not be allowed under the proposed regulations.

Also, any idea when all these issues will be ironed out?

The IRS is aiming for the end of June but (i) it hasn't communicated anything that even sounds like a firm commitment yet and (ii) the IRS' record of issuing the proposed or the final 403(b) regulations shows that they miss their deadlines a lot. I don't mean to bash the IRS because they are better at meeting their goals elsewhere. Seems to me that 403(b) regulations only affect a few industries and it's easy for this project to get bumped down their priority list.

The IRS is more clear in saying that the effective date should be January 1, 2007 (originally it was going to be January 1, 2006), so final regulations as late as September 30 wouldn't be too big of a surprise.

The IRS has definitively announced that the effective date of the regs is January 01, 2007.