Tax Facts

4057 / May an employee exchange his or her tax sheltered annuity contract for another contract within the same plan?

Under the final 403(b) regulations, a non-taxable exchange or transfer is permitted for a 403(b) contract if it:

(1)  is a mere change of investment within the same plan, that is, a contract exchange;

(2)  constitutes a plan-to-plan transfer, so that there is another employer plan receiving the exchange (see Q 4058); or

(3)  it is a transfer to purchase permissive service credit ( Q 4060).1

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