IRS announces pre-approval program for Sec. 403(b) plans

BY SALLY P. SCHREIBER, J.D.

The IRS has released a revenue procedure establishing a program for the pre-approval of Sec. 403(b) plans. Under the program, beginning June 28, 2013, it will accept applications for opinion and advisory letters as to whether the form of “prototype plans” and “volume submitter plans” meet the requirements of Sec. 403(b) (Rev. Proc. 2013-22).

Sec. 403(b) plans are retirement annuity plans established by Sec. 501(c)(3) organizations and public schools. The program offers employers that maintain a Sec. 403(b) plan an alternative to adopting an individually designed plan in order to satisfy the written plan requirement of the final 2007 regulations under Sec. 403(b) by allowing an employer to satisfy the written plan requirement and obtain assurance that its plan meets the requirements of § 403(b) by adopting a plan that has received an opinion or advisory letter under the program.

For purposes of the revenue procedure, a prototype plan is a defined contribution plan that is intended to qualify under Sec. 403(b) that is made available by a prototype sponsor to eligible employers that wish to adopt a 403(b) plan. A volume submitter plan means either a specimen Sec. 403(b) plan of a volume submitter practitioner or a plan of a volume submitter’s client that is substantially similar to the volume submitter’s approved specimen plan.
The program, which the IRS adopted in response to comments from the public recommending ways to assist eligible employers in complying with the written plan requirement, is very similar to that available to 401k plans under Rev. Proc. 2011-49. However, a major difference in the two programs is that the 403(b) program will not permit plans to request individual determination letters.

In addition to discussing the details of the program and how to apply for an opinion or advisory letter, the revenue procedure explains the differences between the revenue procedure and the draft revenue procedure on the program that was issued in Announcement 2009-34.

Sally P. Schreiber ( sschreiber@aicpa.org ) is a JofA senior editor.

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