can a 403b rollover funds into a 401k who elects to use a PEO(co-employer)

[Guest bariww]

My organization is looking at using a Professional Employer Organization to handle all of our benefits, payroll etc., and doing so would essentially make them the employer of record for payroll, tax and benefit purposes. We currently have a 403b and would offer the PEO's 401k if we opt to go this route. My question is, can our employees roll their 403b monies into the new 401k plan since we would no longer be the employer of record and the 401k plan would not be "ours"? Is that a distributable event? Thanks in advance!

[rcline46]

You are still the 'common law' employer of your employees. The PEO will not be the employer. If you join the PEO plan, it will be as an adopter of a multiple employer plan.

Therefore, unless you terminate the 403(b) plan, there will not be a distributable event and no employee will be allowed to 'transfer' their accounts into the 401(k). Note I said transfer because without a distributable event, there cannot be a rollover.

[Guest bariww]

So, if we terminate the plan then the employees can rollover their monies into the PEO plan, right? What if we termed the 403b and established our own 401k plan? Is terming the 403b a distributable event?

[Guest Sieve]

For some guidance, look at the string entitled "Freezing a 403(b) vs plan termination"--it's also been bouncing around today.