If you’re one of the many 403(b) plan sponsors just getting started in dealing with the impact of the new 403(b) regulations on administration and compliance requirements, this post may provide you some guidance in focusing on the issues that need to be addressed by the rapidly approaching January 1, 2009 effective date. These are some of the major issues you will need to address:
- Requirement for a Plan Document. Both Non-ERISA and ERISA 403(b) plan sponsors must have a signed document in place by January 1, 2009.
- Non-Discrimination Rules. This requirement applies to both Non-ERISA and ERISA 403(b) plans.
- Contribution Limits. Plan sponsors will be responsible for the compliance of 403(b) contributions with the Internal Revenue Code including the correction of excess amount contributed.
- Timing of Contributions. Plan sponsors must deposit contributions to plan providers within a “reasonable period” of time.
- Transfers to Other 403(b) Contracts. New rules affect participants’ moving their assets to other 403(b) annuities or 403(b) custodial accounts.
- Plan Termination. The new rules permit 403(b) plan sponsors to terminate their plan and distribute the assets under specified conditions.
The IRS has constructed this "road" by providing comprehensive guidance for 403(b) plans for the first time in over 40 years. It doesn’t have to be a Toll Road.