Here’s a rundown of what’s allowable under 90-24 transfers under the new 403(b) regulations as explained by Jamie Ohl, VP for The Hartford’s Retirement Plans Group. “The prior 403(b) regulations allowed ‘annuity-to-annuity’ transfers with no employer involvement,” Ohl says, but here’s what became effective Sept. 24:
Exchanges within the same plan permitted:
If the plan allows;
Benefits are not diminished;
Distribution restrictions are not diminished;
Employer and provider enter into Information Sharing Agreement (ISA).
Plan-to-plan transfers permitted:
Similar to qualified (401(k)) plans;
Participant is employee or former employee for receiving plan;
Sending and receiving plans allow;
Benefits and distribution restrictions are not diminished.
In effect, Ohl explains, “the [new] regulations limit direct transfers to authorized funding vehicles only after September 24, 2007. Transfers to funding vehicles that are not authorized under the plan will not be permitted after September 24, 2007, unless the vendor and employer agree to share information related to tax compliance. (This replaces the prior rule under IRS Revenue Ruling 90-24, which generally allowed a participant to make a direct transfer to any 403(b) annuity contract, even one that was not one of the plan’s approved funding vehicles.)”