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Restricting 403(b) Transfers

Q. A school district elects to change from a multi-vendor 403(b) platform to a single vendor. The district is allowing employees to continue making contributions to deselected vendors, but employees who start in the district after Aug. 1, 2014, can only participate in the single-vendor option.

Transfers between vendors (like-to-like) are allowed but only if going to the single-provider solution. The single vendor is also a pseudo administrator of the plan but the employer is still having to sign off on some things (name changes, beneficiary changes as well as all loan/hardship withdrawals with just one of the deselected vendors). 

Under those circumstances, can the employer/single-vendor option restrict transfers where the only transfers allowed go to the single vendor?  

A. While I cannot be certain, it would appear this might violate the universal availability rule. While I cannot point the employer to a definitive answer, this appears to be a gray area. I would suggest the employer call the general use telephone number at the IRS (202-283-9634) to pose this question.