Audience: Employers who had previously adopted the alternate transfer provision

Product: Defined Benefit and Hybrid

Contacts: Primary and HR

Date Sent: 1/12/2023

Format: Mailing

Description: A letter was mailed to primary and HR contacts of 128 employers who had previously adopted the alternate transfer provision notifying them of a change to our policy.

MERS’ standard transfer policy is that an employee transferring from one division to another will be automatically enrolled in the open plan of the division they are being transferred into. However, some municipalities had adopted an alternate transfer provision that allowed individual employees to choose to enroll in either the open plan or the closed plan of the division they were being transferred into. A recent Internal Revenue Service (IRS) ruling regarding employee transfers between retirement plans triggered a compliance review, which resulted in a change to our policy on employee transfers between divisions.

As a result, the MERS Retirement Board amended the Plan Document to remove the alternate plan transfer option, effective January 1, 2023. The Board also approved a new plan continuation policy that will automatically be applied for employers who had previously adopted the alternate transfer provision. Under this policy, all transferred employees will be enrolled in the same plan type (if one exists) as the division they are being transferred from or were previously enrolled in, regardless of whether the plan is closed or open. If none exists, they will be enrolled in the open plan for that division. This new rule will also apply to rehired employees.

Sample: View Sample Letter. The Participant Transfer and Rehire Rules Brochure was enclosed with the letter and explains both the standard transfer rules and the plan continuation policy in further detail.