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Scheduling Regular Date Nights with a 403(b) Plan Document

June 30, 2020—the deadline for employers to adopt an Internal Revenue Service (IRS) pre-approved 403(b) plan document for the first time—has passed. That date also marked the deadline for 403(b) sponsors to retroactively correct defects in their 403(b) plan documents (whether pre-approved or individually designed) under the first-ever 403(b) remedial amendment period.
However, an employer’s 403(b) plan still requires ongoing maintenance to comply with plan design modifications and federal legislative and regulatory changes. The following overview is intended to help employers understand the IRS due dates—both past and future—to keep their 403(b) plan documents compliant. 
When was an employer first obligated to have a 403(b) plan document?
Under the final IRS 403(b) regulations, an employer (other than certain church plan sponsors) was required for the first time to establish and maintain a 403(b) plan document, regardless of whether that 403(b) plan was  subject to ERISA.
In Notice 2009-3, the IRS noted that a 403(b) plan would be considered to meet the “written plan” requirement of the 403(b) regulations if the employer adopted a 403(b) plan document by Dec. 31, 2009 and the employer operated the 403(b) plan in accordance with a reasonable interpretation of Internal Revenue Code Section 403(b) and related guidance. The employer was also responsible for making best efforts to retroactively correct any 2009 operational defects to comply with the terms of the written 403(b) plan document.
If an employer adopted a 403(b) plan by Dec. 31, 2009, what was the purpose of restating that 403(b) plan document again by June 30, 2020?
In conjunction with the 2017 issuance of favorable IRS advisory and opinion letters to pre-approved 403(b) plan documents, IRS guidance permitted an employer that had already adopted a 403(b) plan in 2009 to adopt an IRS pre-approved 403(b) plan document with a Jan. 1, 2010 retroactive effective date.
That retroactive effective date provided the employer with a remedial amendment period to correct any defective plan document provisions and to align plan operation with the terms of the plan document. An employer adopting an IRS pre-approved 403(b) plan document by the June 30, 2020 remedial amendment date could rely on the favorable IRS advisory or opinion letter accompanying the pre-approved plan document that defects in the prior 403(b) plan document had been automatically corrected.
In September 2019, the IRS issued Revenue Procedure 2019-39, which extended the remedial amendment period to individually designed 403(b) plans. As a result, an individually designed plan adopted in 2009 was also able to resolve plan document defects retroactively to Jan. 1, 2010. However, since the IRS does not have a determination letter program for individually designed 403(b) plans, the employer will not have a favorable IRS letter indicating that the plan document, as adopted, meets the “written plan” regulatory requirements.
Will there be additional remedial amendment periods for 403(b) plans, now that June 30, 2020 has passed?
Yes, the IRS expects to require a 6-year cycle of regularly scheduled restatement periods for 403(b) plans. This schedule will enable an employer to resolve plan document issues and to update its 403(b) plan document (whether IRS pre-approved or individually designed) with a retroactive effective date to the beginning of that cycle’s restatement period. 
When must a 403(b) plan document be amended for federal legislative and IRS regulatory changes?
With the publication of Notice 2019-64, the IRS began issuing an annual Required Amendments List that included federal statutory and administrative changes applicable to 403(b) plans. That notice established Dec. 31, 2021 as the deadline to amend 403(b) plans permitting hardship withdrawals on or after Jan. 1, 2020 for the final IRS hardship guidance. 
The IRS notes that, in general, changes will not appear on a Required Amendment List until IRS guidance (including any model amendment) has been issued with respect to those changes. For example, both the Setting Every Community Up for Retirement Enhancement (SECURE) Act and the Coronavirus Aid, Relief, and Economic Security (CARES) Act provide that 403(b) plans be amended by the end of the 2022 plan year (if the employer is a 501(c)(3) organization) or by the end of the 2024 plan year (if the employer is a public school) unless the Secretary of the Treasury prescribes a later date. 
When must a 403(b) plan be amended for plan design changes initiated by the employer?
The IRS’ Required Amendment List does not apply to modification of optional plan design features. The deadline for adopting an amendment modifying 403(b) plan design depends on whether the employer is governmental or nongovernmental:
  • If the employer is a 501(c)(3) organization; the amendment must be adopted by the last day of the plan year in which that amendment is effective year.
  • If the employer is a public school, the amendment must be adopted by the later of:
    • the last day of the plan year in which the amendment is effective; or
    • 90 days after the close of the second regular legislative session of the legislative body with the authority to amend the plan that begins on or after the date on which the amendment is effective.
What else should an employer know about maintaining its 403(b) plan document?
Employers should keep in their permanent plan records:
  • signed 403(b) plan documents (including completed adoption agreements),
  • favorable IRS letter (if a pre-approved 403(b) plan document),
  • signed plan amendments, and
  • board resolution approving the adoption, restatement, and amendment (as appropriate) of the 403(b) plan document.
In the event that the IRS audits the 403(b) plan, the employer may need to provide proof that the plan document was timely and effectively adopted, including proof that the plan or amendment was signed by an authorized individual if the employer. 
Linda Segal Blinn, J.D., is vice president of Technical Services for Tax-Exempt Markets at Voya Financial. She is not a practicing attorney for Voya Financial. 
This material was created to provide accurate information on the subjects covered. It is not intended to provide specific legal, tax or other professional advice. The services of an appropriate professional should be sought regarding your individual situation. These materials are not intended to be used to avoid tax penalties, and were prepared to support the promotion or marketing of the matters addressed in this document. The taxpayer should seek advice from an independent tax advisor.
Opinions expressed are those of the author, and do not necessarily reflect the views of NTSA or its members.