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457(b) Transfers/Exchanges

Q. Suppose that a third party administrator has said that it will no longer allow 457(b) transfers/exchanges from one approved vendor to another within the same school district. The plan document has not changed, but the TPA’s interpretation of the law has. Is the TPA correct?

A. The 457 regs only address the types of entities that are named that accept the contributions — trustees (banks), custodians (mutual funds) or issuers (insurance companies). Think of this more like a 401(k) plan. The employer selects the investments (which can change from time to time) and if the employer agrees, a provider can be frozen regarding ongoing contributions and accepting money from other investments in the plan. I would ask the employer for their policy on investments.

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