Q. Can a non-QCCO (qualified church-controlled organization) transfer assets from a non-ERISA 403(b) to an ERISA 403(b) plan?
Some background: The non-QCCO previously adopted as a participating sponsor a church 403(b)(9) plan which was not subject to ERISA. The non-QCCO has established a new, separate ERISA 403(b) plan for their organization effective Jan. 1, 2018. The new provider has advised them that the assets from their current plan cannot be transferred to the new plan because transferring assets between a non-ERISA 403(b) and an ERISA 403(b) plan is not allowed. And as such, participants in the 403(b)(9) can make an election as to the distribution of their funds.
Is this information correct?
A. Yes, you can move assets between 403(b) plans (doesn’t matter if there are non-ERISA or ERISA plans). As a matter of fact, under the PATH Act, “church plans” (including QCCOs and non-QCCOs) can even transfer or merge 401(a) plans with 403(b) and vice versa. We are still waiting on guidance from the IRS on this merger, so caution right now should be taken. The employer could decide to terminate the non-ERISA plan and distribute the assets to participants — that decision would be up to the employer.