General Information Regarding Transactions

403b Partner serves as Third Party Plan Administrator (TPA) for Non-ERISA 403(b) and 457 Plans. In this role, we provide participant transaction processing, Compliance oversight, Plan document establishment and maintenance.

403b Partners conducts the appropriate due diligence required for determination eligibility for a given transaction prior to authorization.

 

Before you submit a transaction to 403b Partners, please note the following information regarding transactions:

  • Transactions may be restricted by a vendor’s investment agreement

  • All transactions are subject to their availability as an “optional feature” under the 403(b)/457 Plan Document(s) for the Employer(s) associated with a transaction.

  • All transactions are subject to meeting established requirements, see below for additional information.

 

Exchanges and Transfers: Transaction Definitions and Requirements

 

Contract Exchange: A Participant’s 403(b)/457 Account Assets under an Employer’s plan are moved to a new or existing 403(b)/457 account under the same Employer’s 403(b)/457 plan.
Requirements: The receiving Vendor must be a Vendor that is eligible to receive exchange and transfers in the Employer’s plan.

 

Plan to Plan Transfer OUT of the Plan: Funds in a 403(b)/457 Account associated with an Employer (the “releasing” plan) are moved to another Employer’s 403(b)/457 plan (the "receiving" plan). Note: The account may remain with the same Vendor (referred as an "internal transfer") it may be moved to another Vendor available in the new Employer’s plan. The funds transferred to the "receiving" Plan are subject to that plan's distribution requirements.
Requirements: Participant must be eligible for a distribution out of the releasing Employer's plan. Please see "Regular Distributions out of the Plan" for more information on eligibility for a distribution. Also see Plan to Plan Transfer INTO the Plan below.

 

Permissive Service Credit Transfers: Funds in a 403(b) account are transferred to a State Retirement Plan for the purpose of purchasing service or waiting time.
Requirements: Participant must provide documentation from the State Retirement Plan detailing the amount needed to purchase service or waiting time, along with any transaction documents required to facilitate the transfer of funds, for the Plan Administrator to provide authorization.

Distributions: Transaction Definitions and Requirements

 

Regular Distributions OUT of the Plan: A Participant withdraws the funds in a 403(b)/457 account and directs the payment to his/herself.
Requirements: A single Qualifying Event must occur to for a Participant (or in the event of death, the beneficiary or beneficiaries) to distribute the funds. These events include:

  • Attainment of Age 59 ½

  • Severance from Employment Severance is defined as a complete severance from any employment relationship with the Employer sponsoring the 403(b)/457 plan.

  • Disability (Disability in this context is defined as the inability to participate in gainful employment of any type due to a disability or illness that is of an indeterminate length and/or will result in the Participant’s death (official documentation of the disability, duration and work status required) ).

  • Death (See below for additional information)

Required Minimum Distribution (RMD)

Required Minimum Distributions (RMD) are a transaction type that retirement plan account owners must initiate when they reach a certain age*. The minimum amount that must be withdrawn annually based upon a calculation that takes into account the participant's account balance and their anticipated life expectancy.

In 2019 and years prior, the RMD age was 70½. Your first required distribution must be made by April 1 of the year following the year when you turned 70½. For example, if you turn 70½ in February 2018, you must take your first RMD by April 1, 2019. The IRS calls this your Required Beginning Date.

However, for the year 2020, The Cares Act waived the requirement for individuals who were required to take an RMD in 2020. This waiver included RMDs for individuals who turned 70½ in 2019 who would have taken their very first RMD in 2020.

For 2021, the age for first RMD is now 72 per changes introduced in the SECURE Act. This IRS posted a very detailed primer on recent changes to RMD rules here.

 

Please consult with a tax or financial advisor regarding RMDs.  There are special circumstances and variables that can impact the amounts and timing of distributions.
 

Rollover Distribution OUT of the Plan: A Participant withdraws the funds in a 403(b)/457 account and directs the payment to another qualified retirement plan. Note: The account may remain with the same Vendor (referred to as an internal rollover) or it may be moved to another Vendor.
Requirements: Same as a Regular Distributions OUT of the Plan (see above).

Death Beneficiary Claim: A Beneficiary of a 403(b) account moves the account assets from a deceased Participant in an Employers plan into the beneficiary's name, by rolling the funds into another qualified retirement plan or directing the distribution to his/herself.
Requirements: A copy of the deceased Participant’s death certificate must be provided and the Beneficiary information must be verified with the Vendor.

Hardship Distribution/Unforeseen Emergency Withdrawals: Click here for information on Hardship Distributions and Unforeseen Emergency withdrawals..

Distribution of assets via QDRO (Qualified Domestic Relations Order): Please see our dedicated "QRDO" link in the left-hand navigation menu or click here for information.

Loans: Your Employer's Plan Document will specify whether or not loans are allowed under your 403(b)/457 Plan. If allowed under your 403(b) plan, you will also need to confirm that loans are available under your individual 403(b) annuity contract or custodial account.

Loan amounts are subject to any limits stated in the underlying annuity or custodial account contract. Apart
from the plan and the investment, however, loans from 403(b)/457 plans are limited by a 50/50 rule: they
generally cannot exceed the lesser of:
• $50,000;
• The greater of $10,000 or 50 percent of the participant’s present account balance (assuming all
contributions have been elective deferrals).
• The loan agreement must require repayment within five years, unless the loan proceeds are used to acquire
a dwelling unit that will, within a reasonable time, be used as the participant’s principal residence.
Generally, principal-residence loans are scheduled for repayment within fifteen years.