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Does Rev. Proc. 2007-71 Replace 90-24

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I'm starting a new topic post here regarding getting out of a high-cost plan. I had thought I might be able to do that through the old Rev. Ruling 90-24 but that got superseded by the statutory changes and the final regulations.

 

But a "mini-course" I took through the IRS website

 

http://www.stayexempt.org/Mini-Courses/403b_Employers/403b-tax-sheltered-annuity-plans-employers.aspx

 

implies that what was permitted under Rev. Ruling 90-24 -- that is, placing one's 403(b) assets into something not currently offered by the employer's plan -- is still allowed, provided the employer and the new custodian enter into an information sharing agreement, and provided the new investment does not violate anything in the employer's plan. See slides 17 and 18.

 

Another search took me to Rev. Proc. 2007-71, section 6.4 of the model language that implies that 403(b) assets can be moved to a custodial account, provided that information sharing is set up -- but that entire section also implies that the new custodian is not receiving regular contributions.

 

I have an inquiry into the IRS (there's actually a person named at the end of Rev. Proc. 2007-71). In the meantime, if anyone has any insight, I'd appreciate hearing it.

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In a round about way, it does.

 

Rev. Proc. 2007-71 provides model language for written plan documents that is required by the final 403(b) regulations. The model language in the revenue procedure was written to conform with the new regulations.

 

The regulations were effective July 26, 2007 and generally became applicable for plan years beginning after December 31, 2008. It was the regulations that supercede Rev. Rul. 90-24 (and a host of other guidance that the IRS had provided in prior years!).

 

Hope this helps.

 

By the way, I seem to recall that the revenue procedure was written by Bob Architect. If my recollection is correct, be aware that Bob left the IRS for a more lucrative position elsewhere.

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Guest Joel L Frank

I'm starting a new topic post here regarding getting out of a high-cost plan. I had thought I might be able to do that through the old Rev. Ruling 90-24 but that got superseded by the statutory changes and the final regulations.

 

But a "mini-course" I took through the IRS website

 

http://www.stayexempt.org/Mini-Courses/403b_Employers/403b-tax-sheltered-annuity-plans-employers.aspx

 

implies that what was permitted under Rev. Ruling 90-24 -- that is, placing one's 403(b) assets into something not currently offered by the employer's plan -- is still allowed, provided the employer and the new custodian enter into an information sharing agreement, and provided the new investment does not violate anything in the employer's plan. See slides 17 and 18.

 

Another search took me to Rev. Proc. 2007-71, section 6.4 of the model language that implies that 403(b) assets can be moved to a custodial account, provided that information sharing is set up -- but that entire section also implies that the new custodian is not receiving regular contributions.

 

I have an inquiry into the IRS (there's actually a person named at the end of Rev. Proc. 2007-71). In the meantime, if anyone has any insight, I'd appreciate hearing it.

 

You can transfer your balance from a vendor that is on your Plan's list to a vendor that is not. To do this your Plan must enter into an information sharing agreement with the vendor. RR 90-24 allowed you to do this without an exchange of information agreement between the Plan Administrator and the outside investment provider.

 

Has anyone done such a capital transfer or "exchange"?

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In a round about way, it does.

 

Rev. Proc. 2007-71 provides model language for written plan documents that is required by the final 403(b) regulations. The model language in the revenue procedure was written to conform with the new regulations.

 

The regulations were effective July 26, 2007 and generally became applicable for plan years beginning after December 31, 2008. It was the regulations that supercede Rev. Rul. 90-24 (and a host of other guidance that the IRS had provided in prior years!).

 

Hope this helps.

 

By the way, I seem to recall that the revenue procedure was written by Bob Architect. If my recollection is correct, be aware that Bob left the IRS for a more lucrative position elsewhere.

 

Yes, the name was Robert Architect. I got an email reply but they said that they reply by telephone and I did not supply that information so I re-sent with the relevant info. I'll report back.

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In a round about way, it does.

 

Rev. Proc. 2007-71 provides model language for written plan documents that is required by the final 403(b) regulations. The model language in the revenue procedure was written to conform with the new regulations.

 

The regulations were effective July 26, 2007 and generally became applicable for plan years beginning after December 31, 2008. It was the regulations that supercede Rev. Rul. 90-24 (and a host of other guidance that the IRS had provided in prior years!).

 

Hope this helps.

 

By the way, I seem to recall that the revenue procedure was written by Bob Architect. If my recollection is correct, be aware that Bob left the IRS for a more lucrative position elsewhere.

 

Hi Michael,

Architect went to Valic, part time. I talked with him at the NAGDCA conference a few weeks ago.

 

In all of my reading of the new 403b regs, I have never heard of this option. My understanding is that Vanguard or Fidelity would not sign this specific agreement either. The fact of the matter is that ANY agreement that VG and Felidty signs would cost too much and that only a few people would actually transfer their legacy money. It just isn't worth it as employees could not contribute more money. Why bother for only a few people. This is only my superficial understanding of this matter and I have no data to back up what I said. What I do know is that Fidelity or Vanguard will not sign the agreements with the vast majority of K12 school districts period.

 

BTW, at the NAGDCA, I thanked the IRS for reforming the 403b regs. It's made a big difference in our huge district. We know so much more than we did because districts are required to oversee the hideous 403b with K12 school districts.

 

2 cents,

Steve

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Guest Joel L Frank

I'm starting a new topic post here regarding getting out of a high-cost plan. I had thought I might be able to do that through the old Rev. Ruling 90-24 but that got superseded by the statutory changes and the final regulations.

 

But a "mini-course" I took through the IRS website

 

http://www.stayexempt.org/Mini-Courses/403b_Employers/403b-tax-sheltered-annuity-plans-employers.aspx

 

implies that what was permitted under Rev. Ruling 90-24 -- that is, placing one's 403(b) assets into something not currently offered by the employer's plan -- is still allowed, provided the employer and the new custodian enter into an information sharing agreement, and provided the new investment does not violate anything in the employer's plan. See slides 17 and 18.

 

Another search took me to Rev. Proc. 2007-71, section 6.4 of the model language that implies that 403(b) assets can be moved to a custodial account, provided that information sharing is set up -- but that entire section also implies that the new custodian is not receiving regular contributions.

 

I have an inquiry into the IRS (there's actually a person named at the end of Rev. Proc. 2007-71). In the meantime, if anyone has any insight, I'd appreciate hearing it.

 

Rev. Ruling 90-24 also did not allow for future contributions to go to the vendor that was receiving the capital transfer---it only allowed for balances to be transferred. The same transaction can now be achieved provided your Plan enters into an information sharing agreement with the vendor that receives your capital transfer.

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I'm starting a new topic post here regarding getting out of a high-cost plan. I had thought I might be able to do that through the old Rev. Ruling 90-24 but that got superseded by the statutory changes and the final regulations.

 

But a "mini-course" I took through the IRS website

 

http://www.stayexempt.org/Mini-Courses/403b_Employers/403b-tax-sheltered-annuity-plans-employers.aspx

 

implies that what was permitted under Rev. Ruling 90-24 -- that is, placing one's 403(b) assets into something not currently offered by the employer's plan -- is still allowed, provided the employer and the new custodian enter into an information sharing agreement, and provided the new investment does not violate anything in the employer's plan. See slides 17 and 18.

 

Another search took me to Rev. Proc. 2007-71, section 6.4 of the model language that implies that 403(b) assets can be moved to a custodial account, provided that information sharing is set up -- but that entire section also implies that the new custodian is not receiving regular contributions.

 

I have an inquiry into the IRS (there's actually a person named at the end of Rev. Proc. 2007-71). In the meantime, if anyone has any insight, I'd appreciate hearing it.

 

Rev. Ruling 90-24 also did not allow for future contributions to go to the vendor that was receiving the capital transfer---it only allowed for balances to be transferred. The same transaction can now be achieved provided your Plan enters into an information sharing agreement with the vendor that receives your capital transfer.

 

Thanks for the reply. Because I'm still an employee and contributing, this would not be a good option for me. The Lincoln rep comes in Tuesday. I'll ask about the fees/expenses for the plan we are on, and whether Lincoln offers a custodial account in place of the annuity. That might be the best I get out of my employer, as they have had a deer in the headlights look about the "add another vendor" option.

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