Ask the Experts April 14, 2020

Does SECURE Act Make It Easier to Terminate a 403(b)?

Experts from Groom Law Group and Cammack Retirement Group answer questions concerning retirement plan administration and regulations.

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“I heard that the new SECURE Act retirement plan legislation may have made it easier to terminate a 403(b) plan. If this is the case, can the Experts clarify?”

Stacey Bradford, Kimberly Boberg, David Levine and David Powell, with Groom Law Group, and Michael A. Webb, vice president, Retirement Plan Services, Cammack Retirement Group, answer:

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Absolutely! Your sources are accurate that the Setting Every Community Up for Retirement Enhancement (SECURE) Act provides for increased flexibility for plan providers in connection with 403(b) plan terminations.

Specifically, the legislation directs the IRS to issue guidance by June 20, effective retroactively for tax years beginning on and after December 31, 2008, providing that individual custodial accounts may be distributed to participants in-kind on plan termination, eliminating the requirement of a cash distribution.  This change will allow for distributions of custodial accounts under rules similar to the rules that have been available for annuity contracts under a 403(b) plan.

Further, so long as the custodial account remains compliant with applicable 403(b) rules through the date it is actually paid out, it will maintain its tax-deferred basis until payment to the participant (even after the employer terminates the plan).

 

NOTE: This feature is to provide general information only, does not constitute legal advice, and cannot be used or substituted for legal or tax advice.

Do YOU have a question for the Experts? If so, we would love to hear from you! Simply forward your question to Rebecca.Moore@issgovernance.com with Subject: Ask the Experts, and the Experts will do their best to answer your question in a future Ask the Experts column.
Break from the Grind April 13, 2020

TRIVIAL PURSUITS: Do Ostriches Bury Their Heads in the Sand?

The coronavirus pandemic and its impacts may have us wanting to bury our heads in the sand like ostriches do. Or do they?

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Do ostriches bury their heads in the sand?

According to National Geographic, no.

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“Ostriches don’t bury their heads in the sand—they wouldn’t be able to breathe! But they do dig holes in the dirt to use as nests for their eggs. Several times a day, a bird puts her head in the hole and turns the eggs. So, it really does look like the birds are burying their heads in the sand!” it says.

According to another source, in a study of 200,000 ostriches over a period of 80 years, no one reported a single time an ostrich buried its head in the sand (or attempted to do so).

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