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Distributions from 403(b)s

Q. An employer that is part of a multiple employer plan (MEP) that is beginning a new ERISA plan has been advised to distribute all assets to the participants. How is this a distributable event for the participating employer?

A. The participating employer should transfer to another 403(b) (9) plan first. The reason is the plan (even for the MEP) has to be restated effective Jan. 1, 2010, no later than March 31, 2020; this protects the employer and gives them reliance on the old plan. After the restatement onto a single-employer 403(b)(9), then the two options would still exist. Although my question is did the MEP already restate their plan?

If they don’t do this (not my recommended suggestion) then they could transfer the assets from the MEP non-ERISA 403(b)(9) to the ERISA plan but they would lose the reliance on the 403(b) non-ERISA Plan for those prior years. Termination probably would not be an option until we get additional guidance from the IRS, which we are still waiting for.