IRS Seeks Input on 403(b) Opinion Letter Program

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April 23, 2009

In order to promote compliance, IRS is establishing a program for the pre-approval of 403(b) plans. Announcement 2009-34 explains proposed procedures for the review and issuing of opinion letters on the acceptability of submitted plans. In addition, the Service is posting draft sample plan language on the IRS web site. IRS invites public comment on both the procedures and the draft language. Comments are due by June 1.

As part of the final regulations under section 403(b) published in July 2007, sponsors of 403(b) plans are required to maintain a written plan. Under the rules, plan sponsors must adopt written plans by December 31, 2009.

The program for 403(b) prototype plans is intended to enable employee benefits practitioners and financial organizations to get advance approval of “the form of a §403(b) prototype plan [which is]...... "a plan document prepared by a vendor (or other person) who expects the plan to be adopted by at least 30 employers, along with an adoption agreement to be completed by each adopting employer." Employers adopting the prototype plans will generally have assurance that the form of the plan is meets the requirements set forth in the final §403(b) rules. Sample plan language is posted on the IRS site.

IRS encourages public input prior to finalization of the program and sample plan language.
Comments must be submitted to IRS by June 1, 2009.

Staff resource: Mary M. Bachinger, director, tax policy