In Revenue Ruling 2011-7, the IRS addresses the requirements for a plan sponsor to terminate a 403(b) plan, and the tax consequences to participants of doing so. Particularly, the IRS addresses termination of 403(b) plans consisting of employee deferrals and employer contributions whose assets are invested in individual annuity contracts, custodial accounts and regulated investment companies, as well as termination of a 403(b) money purchase pension plan. The guidance is helpful in administering the final 403(b) regulations, as the specific requirements to terminate a 403(b) plan were not addressed in detail in those regulations.
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