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Change of vendors--effect on terminated participants


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A 403(b) plan is changing from one approved vendor to another. Does the plan administrator have an obligation to notify terminated participants who have accounts or annuities at the old vendor that the plan's approved vendor is changing? The terminated participants are no longer receiving contributions on their behalf. On one hand, the individuals at issue are participants in the plan and likely have the same right to receive notifications regarding the plan as active participants. In addition, if the plan allows for contract exchanges, it seems the terminated participants would have a right to know about the switch so they can decide whether to transfer their contract to the new vendor. However, if the plan does not allow for contract exchanges and the terminated participants do not contribute to the plan, it seems the change does not affect the terminated participants and perhaps notice is not necessary.

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