December 31, 2008 Deadline to Adopt a 403(b) Written Plan 
Rev. 10/31/08; E-mail Alert 2008-14

Rev. Proc. 2007-71 requires a written plan or amendments to an existing plan — in compliance with the final 403(b) regulations —  to be in place by no later than January 1, 2009. This deadline applies to off-calendar year plans also.  January 1, 2009 deadline is the key as it is the first day of the tax year of the employees

IRS’ Bob Architect in a NIPA (National Institute of Pension Administrators) webcast presentation in late August and the IRS’ Andrew Zuckerman speaking at the ASPPA Annual Conference on October 20, have both warned that the December 31, 2008 deadline for adopting a 403(b) written plan is a firm deadline. They have both stated that the Internal Revenue Service has no intention of delaying a Dec. 31 deadline for employers to adopt written plan documents for tax code Section 403(b) plans.

Both Mr. Architect and Mr. Zuckerman mentioned that the IRS is working on a pre-approved plan program for 403(b)s and will be issuing an LRM (List of Required Modifications), which is IRS boiler plate language for a plan document. However, the preapproved program will not be ready by the Dec. 31 deadline. It is hoped that the LRM will be released in November. Both stressed the importance of having employers get their 403(b) plan documents drafted and adopted this year. A year is too long to wait if employers don't know how to operate their plans properly and employees don't know what benefits they're entitled to.

Mr. Zuckerman said employers who meet the Dec. 31 plan adoption deadline will be treated fairly by IRS if the plan documents must be corrected later. He also referred practitioners to Rev. Proc. 2007-71, which contains language that could be helpful to employers drafting individually designed plan documents to meet the Dec. 31 deadline.

There are later deadlines for collectively bargained plans, church-related organizations for which the authority to amend the plan is held by a church convention, or for a governmental plan where authority to amend the plan is held by a legislative body that meets in legislative session. Details for each of these later deadline plans is in 1.403(b)-11.

Bill Grossman, QPA