Frozen 403(b) & Active 401(k) Plans
I have a client with an old, frozen 403(b) Plan with the same employer who now sponsors a 401(k) Plan. Client has been told he cannot either transfer the 403(b) funds to the 401(k) or an IRA Rollover.
What provisions might dictate these restrictions?
Permalink Submitted by Alan Spross on Wed, 2008-05-07 00:26
Probably the following portion of Sec 403(b)(11) in the code:
11) Requirement that distributions not begin before age 59 1/2 ,
severance from employment, death, or disability
This subsection shall not apply to any annuity contract unless under such contract distributions attributable to contributions made pursuant to a salary reduction agreement (within the meaning of section 402(g)(3)(C)) may be paid only –
(A) when the employee attains age 59 1/2 , has a severance from employment, dies, or becomes disabled (within the meaning of section 72(m)(7)), or
(B) in the case of hardship. Such contract may not provide for the distribution of any income attributable to such contributions in the case of hardship.
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There was also a 2003 PLR regarding the transfer to current 401k plan. Possibly, the new 403b Regs effective in 2009 will provide some relief.