Employer won't let me move my 403(b)7 money unless I quit or die. See

[Guest Joseph Hoffman]

I have been participating in the 403b7 plan at work and am fully vested in my contributions and my employers. I also have a 403b7 plan from a prior job that I keep since I like the investment options, service etc. much better. I would like to move money (via trustee to trustee transfer) from my current plan to the old one. The current TPA (Fidelity) says that they have no restrictions on such a transfer but my employer doesn't allow it.

When I questioned the benefits office at my employer they said that I need to separate from service or die to get the money transferred. I told them that seemed unreasonable to move my money to an investment that I wanted.

Does the ERISA or any other federal guidlines give me the right to do this?

Thanks in advance for any help you can offer.

Joe Hoffman

[Guest bill mahoney]

Joe,

Unlike employee only contribution plans, the employer does have the right to restrict transfer in an ERISA based 403b plan. They have a fidcuary responibility with an ERISA based plan as well as testing requirements that they would not with only employee contribution plans. This is the same rules that most 401k plans have as well, in not allowing in service transfers or distributions.

[Guest Joseph Hoffman]

Bill,

Thanks for the reply. I assume that they now can restrict the movement even though their contribution amounts to less than 1% of the account value. Just the fact that they contribute gives them the right to restrict due to the fiduciary duty?

Joe

[Guest bill mahoney]

Joe,

If the employer contributes a penny then they face ERISA.

[Guest Joseph Hoffman]

Bill,

That's what I was afraid of. Not the answer I wanted but thank you very much for clearing this up for me, I appreciate your time and willingness to share your knowledge.

Joe

[jlf]

Joseph....get a copy of Revenue Ruling 90-24. See if they will honor your request for a transfer of funds under this Ruling. THEY HAVE THE DISCRETION TO DO SO.

As an alternative solution try to get your employer to add your old 403b carrier to its 403b program.

[Guest bill mahoney]

JLF,

I doubt that you will find any ERISA 403b plans allowing in service transfers. The 90-24 ruling generally is only allowed by non ERISA based plans. As to the second point in having a 403b(7) account. Once you get into employer contributions there are few TPAs that are willing to handle all the reporting and testing requirements required of ERISA based 403b plans. The vast majority that do are insurance companies.

[Guest Joseph Hoffman]

I did tell my employer that death as a requirement seemed restrictive, they didn't laugh either. They have no interest in allowing any movement of the $$. They don't want to let any other investment options in either. It seems they desire a monopoly with the company they have now, who knows if that is of any benefit to them. I'm pretty sure I'll never be able move the $$ as long as I work for them. Oh well.

Thanks again for all the information you have all offered.

Joe

[Felicia]

It is my understanding that there are 403(B) plans that are not subject to ERISA even though the employer makes contributions. Section 4(B) of ERISA provides an exception for governmental plans as defined in section 3(32), church plans, .... 3(32) defines governmental plans as "a plan established or maintained for its employee by the government of the United States, by the government of any State or political subdivision thereof, or by any agency or instrumentality of any of the foregoing." It seems to me that if an entity falls into one of these categories, it will not be subject to ERISA.

[jlf]

Joe.....Have you determined if in fact your plan is an ERISA plan? What kind of non-profit organization is the employer?

[Ellie Lowder]

Felicia, you are correct.

[Guest Joseph Hoffman]

Thanks for the reply Felicia. In my particular case it is a hospital, not a gov't entity so that wouldn't apply to me.

Joe

[Guest CWalker]

One of the reasons your employer might have this arrangement is because it lowers the fees for plan participants as a whole. Since you said that there is only one provider, they probably have an exclusive arrangement with one company.

I used to work for a TPA, and we would only consider exclusive arrangements because of pricing. They calculate assets in the plan in order to come up with a decent price. If you allow money to move out for any reason, it screws up the pricing. They want to offer a competitive price, but they don't want to risk taking a loss.

I would suspect that this restriction is part of the contract with the provider.