IRS unveils document review procedures for preapproved 403(b) plans

The Internal Revenue Service (IRS) issued Revenue Procedure 2013-22, which establishes the procedures the agency will follow when issuing opinion and advisory letters for 403(b) preapproved plans that may be adopted by tax-exempt organizations, public schools, and church-related organizations. Beginning June 28, 2013, sponsors of preapproved 403(b) plans may apply to the IRS for an opinion letter (prototype plans) or an advisory letter (volume submitter, including mass submitter, plans).

The revenue procedure explains:

• The requirements that the preapproved plans must satisfy
• The preapproved plan sponsors’ responsibilities
• The procedures for applying for opinion and advisory letters
• The conditions under which an eligible employer that adopts a preapproved 403(b) plan can rely on the plan documents meeting the tax code and regulatory requirements under section 403(b)

The IRS guidance also includes a remedial amendment provision that allows eligible employers to retroactively correct their plans to satisfy the 403(b) requirements. The new procedures permit the retroactive remedial amendment of 403(b) plans in order to satisfy the written plan requirements and to correct any form defects. This generally would be automatically satisfied if the employer retroactively adopts a 403(b) preapproved plan. Although employers may retroactively amend individually designed plans to correct any defects, the IRS at this time is not offering determination letters for individually designed plans.

Sample language that preapproved 403(b) plan sponsors may use in preparing to submit their plans to the IRS for approval is posted on the agency’s website.

For more information about the IRS’s new procedures for opinion and advisory letters for preapproved 403(b) plans, please contact your Milliman consultant.