403(b) separation of service question
I have a very simple question with, apparently, a difficult to find answer.
If a teacher was separated from service previously from his former employer and is now reemployed by that same employer, would the employee’s original 403(b) and 401(a) accounts still qualify to rollover to an IRA? In other words, he met a distributable event previously, but would his reemployment with the same employer disqualify that distributable event? In this case, it had been 2 years since he was originally employed and he’s not yet 59 1/2 but he still wants to consolidate his accounts to an IRA (yes, he does understand the withdrawal restrictions for the IRA compared to the 403(b)/401(a) accounts).
I’m really looking for some sort of “proof” from the IRS on this, or a ruling or something.
Thank you so much!!
Adam
Permalink Submitted by Alan Spross on Thu, 2011-07-14 17:17
The IRS leaves the matter of “in service distributions” to the plan document. He is now back “in service”.
While he did have a distributable event, that expired upon his re employment. He would then become subject to the plan provisions for in service employees. Perhaps if he is not yet eligible to resume contributions to the plan, it might be somewhat more likely that he could still have access to his prior account and be able to do a rollover.
It is also possible that the 403b plan is in transition due to the required changing of provisions with respect to such plans currently in process, the “orphaned plan” issue etc. But your question is plan specific and that is why you are having problems getting an answer.
Permalink Submitted by Adam Bunday on Thu, 2011-07-14 19:57
Thanks, Alan. You’re truly a wealth of information and I appreciate your quick response.