Non-Profit Healthcare Agency Takeover Question

[ubermax]

my wife's visiting nurse agency has been acquired by another - she's been told that, instead of her 403(b) account being moved to the plan of the acquiring agency , it will remain with her current provider - only new monies will go into the plan of the acquiring agency.

question : how typical is this situation , i.e. common , very rare, etc. ?? and also what would be a possible rationale for keeping the account balance with her currrent provider rather than moving it to the new plan ?

I'm asking these questions because she's not getting help from her HR department.

[mbozek]

my wife's visiting nurse agency has been acquired by another - she's been told that, instead of her 403(b) account being moved to the plan of the acquiring agency , it will remain with her current provider - only new monies will go into the plan of the acquiring agency.

question : how typical is this situation , i.e. common , very rare, etc. ?? and also what would be a possible rationale for keeping the account balance with her currrent provider rather than moving it to the new plan ?

I'm asking these questions because she's not getting help from her HR department.

Who is the provider for the plan that is being acquired? Is it an insurance company?

[ubermax]

my wife's visiting nurse agency has been acquired by another - she's been told that, instead of her 403(b) account being moved to the plan of the acquiring agency , it will remain with her current provider - only new monies will go into the plan of the acquiring agency.

question : how typical is this situation , i.e. common , very rare, etc. ?? and also what would be a possible rationale for keeping the account balance with her currrent provider rather than moving it to the new plan ?

I'm asking these questions because she's not getting help from her HR department.

Who is the provider for the plan that is being acquired? Is it an insurance company?

yes an insurance company ; and I'm using provider & administor/recordkeeper synonomously (sp?)

[mbozek]

The most comon reason for the assets to remain with the insurance company provider is that deferred sales charges would be due on the assets held in the ins. contract if they are removed before a specified period has elapsed, say 3-7 years after the contribution was made.

What this means is that the ins co will continue to hold the assets until the penalty period expires. After expiration the participants will be free to transfer the assets to the plan of the acquiring agency without paying a deferred sales charge.

HR should know the date the deferred sales charges expire and % of the DSC imposed on transfers before the expiration. Usually its a sliding scale based on withdrawals beginning with the year the contribution was made, e.g, 7,6,5,4,3,2,1% fee in each year until 0% in year 8. In this example a contribution made in 2011 could be withdrawn without penalty in 2019.

[ubermax]

what would happen if my wife retires in 6 months - sales charge or no on the withdrawn assets ?

[mbozek]

what would happen if my wife retires in 6 months - sales charge or no on the withdrawn assets ?

You need to check with HR to see what happens. In some cases there will be no deferred sales charge for withdrawals on account of attaining a specified retirement age. Under federal law retirement benefits must be available for distribution no later than age 65 which would prevent a penalty being enforced. But each retirement contract can have different terms.

If the plan is subject to ERISA, the federal pension law, then your wife has a right to receive a summary plan description (SPD) which will describe the major provisons including deferred sales charges imposed on withdrawals.