What is the difference between a contract exchange and a plan-to-plan transfer in a 403(b) plan?
A contract exchange involves the transfer of a participant’s account assets from one 403(b) contract to another 403(b) contract within the same 403(b) plan.
A plan-to-plan transfer involves the transfer of a participant’s account assets from one 403(b) plan to another 403(b) plan if the participant is or was employed by the plan sponsor receiving the transfer. Both the relinquishing and receiving plan must permit transfers.
In addition, current 403(b) regulations require that any exchanged or transferred assets:
− Are subject to the same or stricter distribution restrictions than the prior plan, and
− The accumulated benefit after the exchange or transfer is equal to what it was before the exchange.
Our services include monitoring all exchanges and transfers for compliance with IRS and plan sponsor requirements.
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