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