Nevin Adams, dropped another one of his gems (this one on cryptocurrency and “innovations” in self-directed brokerage accounts) while I was drafting this piece on 403(b) SDBAs, making my piece even more timely. Its a striking case in point of another unique feature showing the differences between 403(b) plans and 401(k) plans: Not
403(b) custodial account
The SECURE Act’s 403(b) Custodial Account “Distribution” Does Not Create IRAs
By Robert Toth on
Posted in 403(b), SECURE Act
The SECURE ACT introduced a concept which was not known well beyond a handful of 403(b) practitioners, that is the “distribution” of 403(b) individual custodial accounts from 403(b) plans. The lack of understanding of what this actually means has even lead one commentator in a highly respected trade organization’s technical piece to claim that this rule transforms 403(b) custodial accounts into IRAs.
Well, that is an easy one to settle: the “distributed” 403(b) custodial contract is NOT an IRA. It is simply a 403(b) contract which no longer has any relationship to a plan.
Continue Reading The SECURE Act’s 403(b) Custodial Account “Distribution” Does Not Create IRAs
The Case For “Distributed Custodial Accounts” From Terminated 403(b) Plans
By Robert Toth on
Posted in 403(b), Lifetime Income
What Happened
One of the biggest disappointments arising from the issuance of the 403(b) regs has been the inability of employers to effectively terminate their plans. At first, the IRS caused quite a favorable stir when it announced that the regs would specifically classify the termination of a 403(b) plan as a distributable event, and…