401(a) Match Plan and 403(b) Deferral Only

[austin3515]

Can I merge these two plans together? Any chance? Perhaps a non-elective transfer?

Let me know.

[austin3515]

FYI, the goal is not to 100% vest the employer money. i.e., that is why we don't want to terminate.

[rcline46]

You cannot merge or do a trustee to trustee transfer from a 401(a) plan to a 403(b) plan (or vice versa). Best to 'freeze' the 401(a) plan and start the matching contributions in the 403(b) plan, and wait until all are naturally terminated or become 100% vested and then terminate the 401(a) plan.

[jpod]

What is the investment platform/cost structure for the 401(a) match plan? How about just converting it to a 401k and terminating/stopping the 403(b)?

[rcline46]

jpod, no ADP testing on the 403(b) is a very good thing. Other minor advantages to a 403(b) usually argue to keeping it alive rather than a 401(k).

[austin3515]

The idea of having my client deposit match to two different plans sounds 3 times more complicated than what they have already; I'm trying to make things simpler

[jpod]

rcline46: I defer to people in the recordkeeping/TPA business, but is no ADP testing really that big a deal when you already must do ACP testing for the 401(a) match plan?

[rcline46]

Austin - only put the match into the 403(b), and freeze the 401(a), so only 1 plan. 401(a) even with 6 year vesting would only last a maximum of 5 more years, maybe less when number of people needing 100% vesting is small.

jpod, yes, no ADP test really a big deal, especially when match is capped.

[austin3515]

But there would be a partial plan termination because no further contributions would be deposited.

[rcline46]

Ahhh, ye olde 'substantial and recurring' rule. Convert the plan to a frozen MPPP, gets rid of the rule.

[mbozek]

Ahhh, ye olde 'substantial and recurring' rule. Convert the plan to a frozen MPPP, gets rid of the rule.

wouldnt converting to MPPP require that plan provide annuity benefit as normal distribution and spousal consent to take lump sum?

continuue 401k for employee elective contribution only by non HCE and use 403b for employer contributions and elective contributions by HCE. Partial termination problem goes away.