TRANFERS OF RETIREMENT MONIES TO VARIOUS PLANSS

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TRANSFERING RETIREMENT PLANS

TRANSFERS ARE SIGNIFICANTLY EASIER THAN DISTRIBUTIONS AND ROLLOVERS
There are two types of transfers:

Plan to plan
Vendor to vendor

In a plan to plan tranfer an employer offers two or more custodians within their sphere of providing for retirement. If an employee transfers money from one of the employer's eligible vendors to another of their eligible vendors this is a plan to plan transfer.

A vendor to vendor transfer occurs when an employee accumulates monies with different employers and different vendors.

Revenue Ruling 90-24 applies to 403(b) transfers. This ruling allows employees to transfer accounts from one 403(b) vendor to another 403(b) vendor. Transfers are considered non-taxable events by the IRS. Revenue Rulling 90-24 also allows beneficiary accounts to be transfered from vendor to vendor.

TRANSFER RESTRICTIONS

Revenue Ruling 90-24 states that when monies are transfered to a new vendor that the restrictions of the new vendor must be as restrictive as the old vendor. For example if money is transfered from a 403(b)(1) annuity contract to a 403(b)(7) Ruling 90-24 states that the money will be treated as 403(B)7 money in that 403(B)7 accounts are more restrictive.

When 401K, and 401a monies are transfered these same types of rules apply. Also if the plan is an ERISA plan the most restrictive rules apply. For example you cannot transfer ERISA plan money to an non-ERISA plan in that the non-ERISA plan would not be as restrictive in nature.

GRANDFATHERED BALANCES
Because no distribution occurs with a transfer, 12/31/96 if the monies are 403(B), MRD pre 12/31/86 and pre 1998 hardship balances must be transfered with the assets when a transfer occurs. The surrendering vendor should pass this information on to thew new custodian so that in the future when an MRD is calculated at retirement the correct amounts will be considered. However, sometimes surrendering vendors do not always pass this information on the new custodian. This is worth checking if you are transfering money to a new vendor.