On Sept. 30, 2019, the IRS released Revenue Procedure (Rev. Proc.) 2019-39. The revenue procedure establishes a recurring remedial amendment system for individually designed and IRS pre-approved 403(b) plans. In addition, the guidance creates an annual Required Amendments List to be published by the IRS.
Establishment of 403(b) Restatement Cycles & Remedial Amendment Periods
Cycle 1 Amendment Period. The first remedial amendment period for all 403(b) plans to correct any plan document defect that began on the later of Jan. 1, 2010 or the date that the plan document was first adopted and ends on March 31, 2020.
Subsequent Cycle Amendment Periods. The subsequent recurring remedial amendment periods for individually designed and pre-approved plans. (The IRS expects to require a regularly scheduled restatement of pre-approved 403(b) plans every six years.) Generally, the recurring cycle amendment periods will enable an employer to update its 403(b) plan document with an effective date that is retroactive to the beginning of the applicable restatement period. These remedial periods will give plans the ability to rectify or add a plan provision that would have otherwise caused a failure to meet Section 403(b)’s written plan requirement. After the close of Cycle 1, pre-approved plans will have remedial amendment periods ending no earlier than the end of Cycle 2, unless otherwise specified in subsequent regulations or guidance.
The IRS expects to issue additional guidance explaining future remedial amendment period deadlines and cycles and noted that employers utilizing a pre-approved plan will have a two-year window following the issuance of updated IRS favorable letters to complete the restatement to the plan document.
Limited Extension of the Current Remedial Amendment Period Extension
The IRS confirms that March 31, 2020, remains the remedial amendment deadline for adopting a plan that meets the 403(b) written plan requirements of the IRS’s Section 403(b) regulations. Under the IRS guidance, the 403(b) plan’s effective date can be retroactive to the later of Jan.1, 2010 or initial effective date of that 403(b) plan.
The IRS recognizes that there are additional federal legislative and regulatory changes (including changes to the hardship safe harbor rules) that become effective near the March 31, 2020 remedial amendment period deadline. If the IRS includes the hardship safe harbor rules in the 2019 Required Amendments List and the rules do not become effective before Jan. 1, 2020, then a limited amendment extension up to Dec. 31, 2021 will be granted. More information about amendment deadlines is included in the charts below.
403(b) Plan Amendment Deadlines Between Remedial Amendment Period Cycles
Starting in 2019, the IRS will begin issuing a Required Amendments List annually to include statutory and administrative changes applicable to 403(b) plans. Each Required Amendments List will include federal legislative and regulatory changes in Section 403(b) written plan requirements that are first effective during the plan year in which the list is published.
The IRS outlines the following deadlines for different types of plan amendments for ongoing 403(b) plans. These deadlines are accelerated for a terminating 403(b) plan, which must adopt an amendment to reflect all applicable 403(b) requirements (including federal legislative and regulatory changes) no later than the date of the plan’s termination.
Individually Designed 403(b) Plans
| Type of Amendment | Purpose | Non-Governmental Employer | Governmental Employer |
| Plan Amendment to Meet Written Plan Requirement | To meet plan document requirements (other than changes noted in the IRS Required Amendments List |
New plans: Dec. 31 of the second calendar year following the calendar year in which the plan is put into effect Existing plans: Dec. 31 of the calendar year following the later of the calendar year in which the amendment is adopted or effective. |
New plans: Later of:
Existing plans: Later of:
|
| Discretionary Amendment | To modify plan design | Last day of the plan year in which the amendment is effective. |
Latter of:
|
| Interim Amendment | To reflect federal legislative and regulatory changes noted in the annual IRS Required Amendments List | Dec. 31 of the second calendar year that begins after the issuance of the Required Amendments List in which the change appears. |
Later of:
|
Pre-Approved 403(b) Plans
| Type of Amendment | Purpose | Non-Governmental Employer | Governmental Employer |
| Plan Amendment to Meet Written Plan Requirement (effective starting with Cycle 2) | To meet plan document requirements with a retroactive effective date | IRS to announce remedial amendment period in future guidance. | IRS to announce remedial period in future guidance. |
| Discretionary Amendment | To modify plan design | Lasta day of the plan year in which the amendment is effective. |
Later of:
|
| Interim Amendment | To reflect federal legislative and regulatory changes noted in the annual IRS Required Amendments List | Dec. 31 of the calendar year after the calendar year in which the change in 403(b) requreiments is effective with respect to the plan. |
Later of:
|
The IRS cautions that the timeframes to amend described in Rev. Proc. 2019-39 403(b) plans cannot be relied upon to amend a 403(b) plan to:
- meet the 403(b) regulatory requirements with a retroactive effective date prior to the date that the plan was adopted; or
- address the 403(b) regulatory requirements needed following the expiration of the applicable remedial amendment period.
Such amendments must be corrected under the IRS’ Employee Plans Compliance Resolution System.
Reprinted with permission from Voya Financial®.
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