403(b)
As you know, the IRS has issued the final 403(b) regulations, replacing existing guidance dating back 40 years. The new regulations make dramatic changes to the rules for all 403(b) plans, including “deferral-only” and other non-Title I 403(b) plans. Among the major changes are:
New plan documentation requirements
Changes to the coverage and nondiscrimination testing rules
New deferral deposit timing rules
Investment exchange limitations
Controlled group rules
Plan termination rules
These changes will go into effect January 1, 2009. Anyone working with 403(b) plans should have knowledge of these new rules now. In addition, the IRS has issued guidance on how the employer and the plan need to handle pre-2009 transfers and exchanges.
To complicate matters further, at the same time the IRS is revising its regulations, the DOL is revising the rules for Form 5500. As a result of the new rules, beginning with 2009 a 403(b) plan which is subject to ERISA will have the same 5500 filing requirements as a 401(k) plan. This includes the requirement to provide participant counts, attach schedules, and attach and audit (for large plans). How the DOL will interface these requirements with the IRS transition rules is anybody’s guess.
For more information about 403(b) plans, refer to Relius educational events and / or subscribe to free pension technical update e-mails as new legislation becomes available or call 800-326-7235, ext. 1100.
To comply with the final regulations, you will need to become educated on the topic, acquire a written plan document, determine how to administer the plan, and process the correct government forms.