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Reminder: Remedial Amendment Period for 403(b) Plans Scheduled to Close on March 31

March 16, 2020

Update: The IRS has announced that it is extending the last day of the initial remedial amendment period for Section 403(b) plans from March 31, 2020, to June 30, 2020. Plan sponsors now have until June 30, 2020, to update their pre-approved and individually designed 403(b) plan documents.

Although sponsors of Code § 403(b) plans were required to have adopted written plan documents by 2009, some uncertainty remained about how to ensure compliance with § 403(b)’s documentary requirements.  In response, the IRS issued Revenue Procedure 2013-22, which established procedures for issuing opinion and advisory letters for 403(b) prototype and volume submitter plans, and provided a remedial amendment period (“RAP”) for plans that were noncompliant in form (had a document error or omission) to come into compliance with the Code’s requirements.  (The IRS has not established a determination letter program for individually designed 403(b) plans).  Relief under the RAP is retroactive to January 1, 2010 (or the plan’s effective date, if later), as long as the plan was adopted by December 31, 2009 (or its effective date, if later), and duly amended prior to the end of the RAP.  The RAP is scheduled to close on March 31, 2020.

If your 403(b) plan document is currently on a prototype or volume submitter plan, your plan document provider has likely already contacted you about restating on an approved document by March 31.  If your 403(b) plan is currently on a custom designed document, you may consider adopting an approved prototype or volume submitter document by March 31 (to get the benefit both of the favorable IRS determination letter received for the form of the plan, and the retroactive compliance of the RAP).  If adopting an approved plan is not feasible or desired, you could also restate your custom designed document by March 31 to get the benefit of the RAP.

It is worth noting that the RAP allows plan sponsors to correct non-compliance in the form of their 403(b) documents if they are restated correctly by March 31.  It does not, however, offer relief for plans that have had operational failures.  Operational failures will still need to be corrected through EPCRS, which may, in some cases, allow for self-correction.  Furthermore, because the relief described here is offered by the IRS, even non-ERISA 403(b) plans can take advantage of the RAP if they are restated by March 31.

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