The 403(b) Pre-Approved Plan Process

Q. What changes has the IRS made to the 403(b) pre-approved plan process?

A. In Rev. Proc. 2021-37, the IRS modified its process for issuing opinion letters for Cycle 2 amendments and changed the Section 403(b) pre-approved plan process to conform more closely to the procedures in the Section 401(a) pre-approved plan process.

These changes include: 

• simplifying the program by eliminating the distinction between prototype and volume submitter plans; 
• providing that the IRS will issue a “Cumulative List of Changes in the Section 403(b) Requirements” identifying the requirements that the IRS will take into account in reviewing 403(b) pre-approved plans submitted for Cycle 2; 
• providing details regarding the system of cyclical remedial amendment periods that follows the initial remedial amendment period; and
• making the provisions regarding reliance on an opinion letter more similar to the provisions applicable under the Internal Revenue Code Section 401(a) pre-approved plan program. This includes provisions that permit the submission during the Employer Adoption Window of an application for a determination letter using Form 5307, “Application for Determination for Adopters of Modified Volume Submitter Plans,” by:

1. an adopting employer of a nonstandardized plan that makes amendments to the plan that are not extensive; or 
2. an adopting employer of any 403(b) pre-approved plan (whether a standardized plan or a nonstandardized plan) that adds language to satisfy the requirements of Code Section 415 due to the required aggregation of plans.