Plan Conversion - Stable Value Fund Locked

[Guest mfitzgerald]

We are converting a plan that was a managed by an insurance company, and durning the deconversion process they have locked up the stable value fund. The participants are allowed to transfer their assets from this investment to another investment, but when we convert the plan they will not allow the liquidation of the fund to transfer to the new custodian. Being that this is a seperate account product, we also cannot just sweep it into the same mutual fund based SVF.

It seems to me that although they have the right to do this due to some small print in the prospectus, that the government may take issue with the fact that participants are effectively forced into this investment for 12 months as their assets cannot be transfered over during plan conversion.

Does anybody know of any cases where the courts have ruled on a matter such as this, or any code section where this type of an issue is addressed?

[Guest msladky]

We are converting a plan that was a managed by an insurance company, and durning the deconversion process they have locked up the stable value fund. The participants are allowed to transfer their assets from this investment to another investment, but when we convert the plan they will not allow the liquidation of the fund to transfer to the new custodian. Being that this is a seperate account product, we also cannot just sweep it into the same mutual fund based SVF.

It seems to me that although they have the right to do this due to some small print in the prospectus, that the government may take issue with the fact that participants are effectively forced into this investment for 12 months as their assets cannot be transfered over during plan conversion.

Does anybody know of any cases where the courts have ruled on a matter such as this, or any code section where this type of an issue is addressed?

What is a mutual fund based stable value fund???? The stable fund separate account at issue, appears to be protecting the remaing investors (as the fund rightly should).

[Disco Stu]

The issue is more than likely not just "small print in the prospectus". All of the stable value funds that I've worked with (which are collective trusts, BTW) require the plan sponsor to sign a participation agreement. These participation agreements have a section that quite clearly lays out the terms under which the plan may completely liquidate the fund. Every one of them I've seen has language that allows for this 12 month delay.