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Changing 403(b) Vendors As a plan sponsor changing vendors...

#1 User is offline   Shawcraw 

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Posted 02 September 2005 - 06:41 PM

I run a non-profit organization and we currently have a 403(b) Plan set up with Mutual of America. I am unhappy with them so I am going to set up a 403(b)(7) with Vanguard. Now, does the organization need to keep the 403(b) with Mutual of America intact in order to have the 403(b)(7) with Vanguard?

To simplify my question: "Does the organization have to have a 403(b) Plan in order to have a 403(b)(7) Plan?

Another vendor told me my employer needs to have a 403(b) intact with a vendor in order for me as the employee to set up a 403(b)(7) with them. This is the reason for my confusion.

Thanks for your help in advance.

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#2 Guest_Sierra_*

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Posted 02 September 2005 - 09:34 PM

Section 403(b) provides for two primary investment choices. Section 403(b)1 authorizes the insurance company annuity while section 403(b)7 authorizes the custodial account for investment in mutual funds. The annuity has the bulk of 403(b) business for both salary reduction and employer match 403(b) programs. The employer does not have to have a 403(b)1 annuity vendor in order to offer a 403(b)7 custodial account with a family of mutual funds. Each investment vendor stands alone.

Peace and Hope,
Joel L. Frank
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