Page 4 of the Season 4 Missions FAQ covers this, but in effect, you have a couple options.
1) Continuing Characters
With this option, you basically just "Move" the character to Seattle. You lose your Season 3 contacts (The ones you'd get Contact SLips for, not ones you bought with Karma), but otherwise it's the same character, same quipment, money, same memories and experiences, etc.
2) Karma Transfer
With this option, you scrap your old character completely. You build a new 400 BP character, then you get to apply any karma your Season 3 character had accrued. You can exchange karma for extra starting cash as well, as per the FAQ. This is a completely new character who doesn't have the experiences of your Season 3 character (Unless you want him to), he just gets a leg up on the new season, Karma wise.
3) Promotion
If the character has 150 or more karma he has to be Promoted to Prime Runner status. If he has fewer than 150, he may opt to be promoted anyway. Promoted characters are still the same old character you were playing, but now they're only eligible for play in Prime Missions (Which hit a snag this year, unfortunately, but we're working to get the first couple launched later thsi year). you then build a completely new starting 400 BP character, but based on your Promoted CHaracters karma total, you can get a couple Benefits that allow you to customize your character a little more than normal, and you get a free starting contact.
For your group, sounds like #2 is probably the best option. I'm sorry you guys didn't enjoy Elevator Ride to Hell
ERtH was designed to be big, over the top, and tough, but sounds like your guys found it to be a bit tougher than anticipated. Sorry!
Anyway, hope that answers your question. Good luck!
Bull