Northwestern Mutual has been removed from the employer's approved list of product vendors.

Does this constitute under the Regs a plan termination with Northwestern Mutual so that an eligible rollover distribution may be made by the employer? I believe that just the removal from the approved list is not enough under the regs. I am of the opinion that the employer must first adopt a written 403b plan and list NW as one of the product providers and then formally terminate/remove NW from the Plan Document. What say you?

Joel

It is my understanding that removal as an approved vendor is not a termination.

I recently attended a webcast which featured an IRS representative who addressed the issue of dropped vendors. I believe that what he said is as follows:

If there are 5 vendors now and the employer drops 2 for ongoing contirubtions, the 2 dropped vendors are still vendors under the plan since assets remain with them. How the dropped vendors are handled depends on how the employer's plan is structured. For example, if the employer defines them under the plan as approved vendors for past contributions, nothing more is required. But, if the employer removes the dropped vendors from the plan document, the employer must enter into an Information Sharing Agreement with the dropped vendors.