If a 403(b) is terminating in 2009, must the plan be restated for the final 403(b) regulations before it terminates?
Rev. 08/21/09; E-mail Alert 2009-13

Yes.

The final 403(b) regulations required 403(b) plans to have a written plan document in place by January 1, 2009.

On December 11, 2008, the IRS issued Notice 2009-3 in which the deadline for adopting a written plan for a 403(b) was changed to December 31, 2009, provided the 403(b) plan operates under the final 403(b) regulations for the 2009 calendar year and adopts a written plan effective as of January 1, 2009 by December 31, 2009.

The deadline relief in Notice 2009-3 follows:
"Relief for 2009
The Service will not treat a §403(b) plan as failing to satisfy the requirements of
§403(b) and the final regulations during the 2009 calendar year, provided that:

(1) on or before December 31, 2009, the sponsor of the plan has adopted a written §403(b) plan that is intended to satisfy the requirements of §403(b) (including the final regulations) effective as of January 1, 2009;
(2) during 2009, the sponsor operates the plan in accordance with a reasonable
interpretation of §403(b), taking into account the final regulations; and
(3) before the end of 2009, the sponsor makes its best efforts to retroactively correct any operational failure during the 2009 calendar year to conform to the terms of the written §403(b) plan, with such correction to be based on the general principles of correction set forth in the Service’s Employee Plans Compliance Resolution System (EPCRS) at section 6 of Rev. Proc. 2008-50 (2008-35 . 464).

The relief under this notice applies solely with respect to the 2009 calendar year, and
may not be relied on with respect to the operation of the plan or correction of
operational defects in any prior or subsequent year."

Thus, all 403(b) arrangements must satisfy the written plan document requirement if they had assets in the plan on January 1, 2009. Even if the plan terminates during 2009, a written plan document must be in adopted.

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