401k moving to a 403b?

[Santo Gold]

This is confusing and I do not have all of the facts, but hoping for some thoughts on whether this would fly

Owner has a small business and has a 401k plan.  Owner is also the exec director of a non profit.  

Exec director wants to start a 403b for the non-profit.

She also wants to move her business 401k into the new 403(b) as she wants to have her business payroll run through the non-profit.

Based on this alone, could we move the merge the 401k into the 403b and could the business employees participate in the new 403b plan?

I need to confirm if the business is being dissolved or will the owner still have the business.  And if the business is still around, the business really cannot be part of a 403b plan, correct?  But about the idea of running the business payroll through the non profit?  Is that a valid work-around to have the business employees participate in the 403b?

Thank you for any comments.  

 

[Bill Presson]

You can’t merge a 401k into a 403b. 

But I think that’s the least of the issues. 

seems like the guy is wanting to use a not for profit entity to pay the wages of the people that actually work for his for-profit business. 

I would have to imagine there are legal issues with that and I would avoid it. If you can insulate yourself by having his CPA and an ERISA atty drive the decisions, then you should be good. 

[Patricia Neal Jensen]

Agree with Bill Presson.  Only 501(c)(3) orgs can adopt a 403(b) plan.  A payroll for a 403(b) plan would mean that the "employer paying the payroll" (sponsoring the plan) is 501(c)(3).  And it is correct that a 403(b) and a 401(k) cannot be merged under current law.