termination of a 403(b) plan

[Guest TV Brokerage Inc]

I have a client who is trying to terminate a 403(b) TDA plan. Their current carrier is telling them they cannot terminate this plan because the carrier does not offer an individual QJSA product. The carrier suggested they find a carrier that does have a QJSA product and roll the group 403(b) plan over to this new carrier and terminate the plan at that point. I would like to provide my client with a list of carriers that will take this transfer and then terminate the plan and offer the QJSA individual product to the plan participants. I also need to find out the cost of doing this. I welcome any suggestions, I am located in the Pittsburgh, PA area.

[mbozek]

I have a client who is trying to terminate a 403(b) TDA plan. Their current carrier is telling them they cannot terminate this plan because the carrier does not offer an individual QJSA product. The carrier suggested they find a carrier that does have a QJSA product and roll the group 403(b) plan over to this new carrier and terminate the plan at that point. I would like to provide my client with a list of carriers that will take this transfer and then terminate the plan and offer the QJSA individual product to the plan participants. I also need to find out the cost of doing this. I welcome any suggestions, I am located in the Pittsburgh, PA area.

Why do you need a QJSA?

Is ths plan subject to ERISA?

[Guest TV Brokerage Inc]

I have a client who is trying to terminate a 403(b) TDA plan. Their current carrier is telling them they cannot terminate this plan because the carrier does not offer an individual QJSA product. The carrier suggested they find a carrier that does have a QJSA product and roll the group 403(b) plan over to this new carrier and terminate the plan at that point. I would like to provide my client with a list of carriers that will take this transfer and then terminate the plan and offer the QJSA individual product to the plan participants. I also need to find out the cost of doing this. I welcome any suggestions, I am located in the Pittsburgh, PA area.

Why do you need a QJSA?

Is ths plan subject to ERISA?

Yes this 403(b) plan is subject to ERISA.

[mbozek]

I have a client who is trying to terminate a 403(b) TDA plan. Their current carrier is telling them they cannot terminate this plan because the carrier does not offer an individual QJSA product. The carrier suggested they find a carrier that does have a QJSA product and roll the group 403(b) plan over to this new carrier and terminate the plan at that point. I would like to provide my client with a list of carriers that will take this transfer and then terminate the plan and offer the QJSA individual product to the plan participants. I also need to find out the cost of doing this. I welcome any suggestions, I am located in the Pittsburgh, PA area.

Why do you need a QJSA?

Is ths plan subject to ERISA?

Yes this 403(b) plan is subject to ERISA.

I dont know if the product you are looking for exists for this situation. Group annuities have different provisions than indivudal contracts and provide more favorable rates/terms for insured participants. Participants dont normally lose their more favorable rights under the group annuity contract when the contract ends. They recieve a certificate of insurablilty that guarantees the benefits provided under the group annuity contract. If the insurance company issues individual contracts the provisoins should not be less favorable to the participants and spouses than the provisions in the group annuity contract. There are a few insurers who issue QJSA group contracts for ERISA plans (TIAA-CREF, VALIC, Principal ) but I dont know if they will alow conversion to an individual contract.

Also the final 403b regulations do not mandate that the 403b benefits must be distributed in the form of an individual annuity upon termination of the plan. The preamble to the 403b regs states that in order for a 403b plan to be considered to be terminated all accumulated benefits must be distributed to all particpants as soon as administratively practicable after termination of the plan. A distribution for this purpose includes delivery of a fully paid individual annuity contract. The preamble indicates that a distribution of an individual contract is only one means of effecting a distribution. What is left unsaid is whether distribution of certificates of insurability under a group annuity contract would be considered a distribution of the particpnat's interest sufficient to terminate the plan. Perhaps you should contact Bob Architect the IRS official who wrote the 403b regs to see what he thinks your options are. He now works for VALIC which may have changed its name. There are also FAQs on the terminating 403b plans at the IRS website.