Charges Related to Tax-Free Exchange Between Contracts

[Guest PGH.ERISA]

The new final 403(b) regulations provide that tax-free transfers can take place between investment contracts if certain conditions are met. One requirement is that the participant account balance immediately after the exchange must be at least equal to the account balance before the exchange. Does anyone know if this means that annuity providers can no longer impose any charges if a participant is making a transfer to a different firm's investment contract under the same 403(b) plan?

[Guest Nolanquinn]

That is a great question and is some pretty confusing language. The vendors are still allowed to charge the normal CDSC that is outlined in the contract or prospectus. What this language refers to is that vendors may not charge any additional fees for the transfer and for the most part will not play a part in most contracts. Hope that helps.

Darren