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IRS Announces 403(b) Relief

December 16, 2008

The IRS has announced relief for 403(b) retirement plan sponsors that do not have a written plan in place by Jan. 1, 2009.

The IRS is extending the deadline for plan sponsors to adopt new written plans or amend existing plans to satisfy final 403(b) regulations because numerous plan administrators expressed difficulties meeting the current Jan. 1, 2009 deadline. This extension will give plan sponsors additional time to put their plan documents in place.

The IRS will treat these plans as meeting the 403(b) requirements and regulations during the 2009 calendar year if: • By Dec. 31, 2009, the plan sponsor has adopted a written 403(b) plan that is intended to satisfy the 403(b) requirements and regulations. • During 2009, the plan sponsor operates the plan in accordance with a reasonable interpretation of 403(b) and the related regulations. • By the end of 2009, the plan sponsor makes it best effort to retroactively correct any operational failure during the 2009 calendar year to conform to the written plan.

The IRS plans to issue further guidance on 403(b) plans, including a revenue procedure establishing programs for 403(b) plans to obtain IRS approval of the plan document and allowing these plans to make remedial amendments to retroactively fix plan provisions under rules similar to those that apply for 401(a) plans.

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