Today, the IRS released the Final 403(b) Regulations. Officially, the title is Final Regulations on Revised Regulations Concerning Section 403(b) Tax-Sheltered Annuity Contracts (T.D. 9340). (hat tip to BenefitsLink.com.)
These regulations are effective July 26, 2007, and are generally applicable for taxable years beginning after December 31, 2008. The preamble states that since most 403(b) are calendar year plans, the intent is that these regulations will generally apply on January 1, 2009.
The current 403(b) regulations were issued in 1964. Even though the IRS has issued guidance on 403(b) plans since 1964, the regulations were not updated to reflect that guidance until now. These regulations also include a number of new provisions which have never been applied to 403(b) plans in the past.
One of those new provisions is the requirement that 403(b) plans are stated on a single plan document. This requirement was contained in the proposed regulations which the IRS issued in 2004, so this change has been highly anticipated. The preamble explains the intent of this requirement is that plans will be easier to understand and administer if the plan provisions are contained within one document. That plan document is permitted to incorporate by reference other documents but it is the plan document which will control any conflicts between provisions in the plan document and the other documents.
For public schools which currently have plans but those plans are not stated on plan documents, the IRS says that it will be publishing guidance which will include model plan provisions which may be used by those public schools. The intent of these model plan provisions is to ease the economic burden on public schools caused by the new plan document requirement.
The plan document requirement is a great step forward for 403(b) plans, but it is not the most exciting requirement in these regs. There is much more to be discovered as I work my way through them while updating our 403(b) plans.
Technorati Tags: 403(b), regulations, IRS, plan document, pension, retirement, ERISA
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