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IRS Extends Written Plan Document Deadline for 403(b) Plans

    Client Alerts
  • December 12, 2008

Final regulations under Section 403(b) of the Internal Revenue Code, which were published in 2007, require sponsors of 403(b) plans (also called “tax-sheltered annuities”) to adopt written plan documents meeting the requirements of the regulations by not later than December 31, 2008.  However, on December 11 the Internal Revenue Service gave us an early Christmas present by extending this deadline until December 31, 2009.  The IRS also indicated that it will publish sample plan language and will establish a determination letter program for 403(b) plans.

Eligibility for the extension is conditioned on the following:

  • adoption of a written plan document by not later than December 31, 2009;
  • operation of the 403(b) plan during 2009 in compliance with a reasonable interpretation of §403(b), including the requirements of the final regulations; and
  • retroactive correction before the end of 2009 of any operational failure during 2009 to conform to the terms the written 403(b) plan pursuant to the provisions of the IRS Employee Plans Compliance Resolution System.

Because the IRS is expected to provide sample 403(b) plan language, we believe that it is in the best interest of most 403(b) plan sponsors to delay adoption of documents that comply with the final regulations until sometime during 2009.