Spin off or transfer

[Guest Pension Girl]

What is the difference in spinning assets out of a 401k and into a new 401k due to discontinuing your participation in the plan vs. a plan to plan transfer - ie trustee to trustee non elective transfer?

Thanks

[J Simmons]

A trustee-to-trustee transfer is the means by which the spinoff to a new plan is effectuated.

A trustee-to-trustee transfer may also be the means by which the assets/liabilities for benefits of a certain group of employees is transferred to an existing plan. In that instance, the receiving plan is not a spin-off plan per se, but more appropriately just a transferee plan.

[Bird]

My definition would be that a spin-off is an employer-initiated transfer of assets from one plan to another; I think it could be a single plan splitting into two plans where one is new, e.g. when a business splits into two businesses, or I think it could be from one existing plan to another existing plan, e.g. when a division or piece of business changes hands.

That is accomplished by transferring assets from one trustee to another, but I think the term "trustee to trustee transfer" is reserved for the transfer of assets from one IRA to another without passing through the owner/beneficiary's hands, as opposed to a rollover where the owner takes possession of the money and must roll over within 60 days, and is limited to once per 12 months.

[K2retire]

On some computer systems trustee transfer is a transaction type coded to not generate a 1099-R. In that case it doesn't have a true meaning to the plan in any legal sense, it's just computer code.

[Bird]

I've seen "trustee transfer" as a source or transaction in plan recordkeeping systems, but I don't think that's what we're talking about here. "Trustee-to-trustee transfer" is in the Code - 402©(2).

[J Simmons]

I've seen "trustee transfer" as a source or transaction in plan recordkeeping systems, but I don't think that's what we're talking about here. "Trustee-to-trustee transfer" is in the Code - 402©(2).

Hey, Bird, as I read IRC § 402©(2)(A) where the term "trustee-to-trustee transfer" is used, it is a transfer to a 'qualified trust' or IRC § 403b annuity contract, and IRC § 402©(8)(A) defines a 'qualified trust' as a trust described in IRC § 401(a) and exempt under IRC § 501(a), not an IRA.

Your first post in the thread indicated you thought that the term "trustee-to-trustee transfer" was reserved just for IRA-to-IRA transfers. It seems the Code's use of the term is from one QRP directly to another QRP. Did I misunderstand your first post? or how the Code reads?

[Bird]

Hey, Bird, as I read IRC § 402©(2)(A) where the term "trustee-to-trustee transfer" is used, it is a transfer to a 'qualified trust' or IRC § 403b annuity contract, and IRC § 402©(8)(A) defines a 'qualified trust' as a trust described in IRC § 401(a) and exempt under IRC § 501(a), not an IRA.

Your first post in the thread indicated you thought that the term "trustee-to-trustee transfer" was reserved just for IRA-to-IRA transfers. It seems the Code's use of the term is from one QRP directly to another QRP. Did I misunderstand your first post? or how the Code reads?

Um, this is pretty lame but my point was that the term "trustee-to-trustee transfer" is used in the Internal Revenue Code (it's not just "computer code") and I happened to find it in that section. But yes, it does appear that the term is not unique to transfers between IRAs, although I'm still not sure when it would apply in a qualified plan environment.