The IRS and Treasury will let the churches, public schools, and charities that have Sec. 403(b) retirement plans take advantage of some of the same individually designed retirement plan determination letter program used by qualified retirement plans, beginning in June 2023.
Rev. Proc. 2022-40 details this change and other changes affecting individually designed retirement plans. One change is that, starting June 1, 2023, Sec. 403(b) retirement plan sponsors may submit determination letter applications for all initial individually designed retirement plans based on the sponsors' employer identification numbers (EINs).
Also beginning June 1, 2023, Sec. 403(b) retirement plan sponsors may also request a determination letter upon plan termination on a Form 5310, Application for Determination for Terminating Plan, or at any time thereafter without regard to their EIN.
Changes to procedures for submitting and processing individually designed retirement plans include:
- A prior letter issued to a pre-approved plan adopter will not be treated as an initial plan determination. A determination letter issued to an adopter of a pre-approved retirement plan as a result of filing a Form 5307, Application for Determination for Adopters of Modified Volume Submitter Plans, is no longer considered in determining whether a plan sponsor is eligible to submit that plan for a determination letter for an initial plan determination on a Form 5300, Application for Determination for Employee Benefit Plan.
- The IRS generally will consider in its review qualification requirements and Sec. 403(b) requirements that are in effect, or that have been included on a Required Amendments List, on or before the last day of the second calendar year preceding the year in which the determination letter application is submitted, subject to any specified modifications on the annual employee plans revenue procedure that provides the administrative and procedural rules for submitting determination letter applications, currently Rev. Proc. 2022-4.
These rules will apply to submissions of all individually designed retirement plans.
The IRS says that Rev. Proc. 2023-4, which is being developed, will contain additional changes to procedural requirements for plan submissions, such as phasing in mandatory e-submission of determination letter requests. Forms 5300 and 5310 will also be updated to reflect these changes. The revenue procedure will be released "in the near future," the IRS said.
— To comment on this article or to suggest an idea for another article, contact Martha Waggoner at Martha.Waggoner@aicpa-cima.com.
