Tech Talk: Assets When a 403(b) Is Terminated

Q. What happens to a participant’s assets when a 403(b) plan is terminated?

A. Generally, a terminating 403(b) plan must distribute all accumulated benefits to the participants and beneficiaries as soon as administratively feasible. Revenue Ruling 2011-7 provides examples of how to terminate a 403(b) retirement plan funded in different ways, and explains when the terminating plan’s distributions are taxable.