Employee Benefits Law Report

Tag Archives: 403(b)

IRS provides guidance to 403(b) plan sponsors who can’t locate participants required to receive distributions (but be mindful of DOL rules too)

The IRS’s Tax Exempt and Government Entities Division recently issued a memorandum (the memo) to its auditors that directed them not to challenge a 403(b) plan as failing to satisfy the required minimum distribution (RMD) standards under circumstances set out in the memo. This guidance is helpful to 403(b) plan sponsors and consistent with missing participant procedures that the IRS set forth for qualified plan sponsors last year. For those 403(b) plans that are governed by ERISA, however, we note that the Department of Labor (DOL) requires plan sponsors to follow additional standards. We describe these issues below.…

403(b) Plan Sponsors Can Mitigate Risk By Taking Proactive Steps Under New EPCRS Guidance

Legendary UCLA Men’s Basketball Coach John Wooden once asked, “If you don’t have time to do it right, when will you have time to do it over?” If you sponsor a 403(b) plan, the IRS may have helped answer this question for you. In our prior blog, we highlighted the new Employee Plans Compliance Resolution System (“EPCRS”) guidance set forth in Revenue Procedure 2013-12 (the “Procedure”). This procedure also provides new guidance for 403(b) plan sponsors. Most critically, plan sponsors who did not adopt a written plan document by December 31, 2009 may submit a written plan document to …

Are Annual 403(b) Universal Availability Notices Required?

Employers with 403(b) arrangements have asked whether they are required to provide annual “university availability” notices. The statute and regulations do not explicitly require this. Code Section 403(b) contains a universal availability requirement, whereby participation is made available to all nonexcludable employees. This includes providing all eligible employees with an effective opportunity to participate. Effective opportunity is satisfied “only if, at least once during each plan year, the plan provides an employee with an effective opportunity to make (or change) a cash or deferred election.” There are various ways to comply with the universal availability requirement, and whether this includes …

403(b) Plan Termination Roadmap

Section 403(b) plans were historically important for tax-exempt employers, but under current tax laws, maintaining a 403(b) plan may no longer be viable or advisable for an employer. An employer that wants to pull out the 403(b) plan termination roadmap first needs to ask a basic question: can I get the engine started (will the investment vendors cooperate with this process)? If the answers to this question is “yes,” then the employer can follow the roadmap set forth in Revenue Ruling 2011-7.…

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