Tax News

CCH (cch.taxgroup.com) reports:

  The IRS has issued guidance regarding Code Sec. 403(b) plans which provides for a remedial amendment period and reliance for employers that, pursuant to upcoming revenue procedures, either adopt a pre-approved plan with a favorable opinion letter or apply for an individual determination letter when available. The IRS expects to publish, within the next few months, a procedure for obtaining an opinion letter that the form of a prototype or other "pre-approved plan" meets the requirements of Code Sec. 403(b) and the regulations thereunder. The procedure will reflect the IRS's consideration of comments it has received on the draft revenue procedure that was provided in Announcement 2009-34 (TAXDAY, 2009/04/15, I.1). Subsequently, the IRS intends to publish a procedure for obtaining an individual determination letter for a Code Sec. 403(b) plan.

  If the relevant condition under Notice 2009-3, I.R.B. 2009-2, 250, with respect to adopting a plan on or before December 31, 2009, is met, and, pursuant to the upcoming revenue procedures, the employer sponsoring the plan either adopts a pre-approved plan that has received a favorable opinion letter from the IRS or applies for an individual determination letter when available, the employer will have a remedial amendment period in which to amend the plan to correct any form defects retroactive to January 1, 2010. Also, beginning January 1, 2010, the form of the employer's written plan will be considered to satisfy the requirements of
Code Sec. 403(b) and the regulations, provided that, during the remedial amendment period, the pre-approved plan is adopted retroactive to January 1, 2010 or the plan is amended to correct any defects in the form of the plan retroactive to January 1, 2010.

  The remedial amendment provision will be included in the upcoming revenue procedures. Also, the revenue procedures will address the time-frames for adopting a pre-approved plan or applying for a determination letter and other details regarding the remedial amendment period. Employers may continue to rely on the model plan language in Rev. Proc. 2007-71, I.R.B. 2007-51, 1184.

  Employers may rely on the new guidance prior to publication of the revenue procedure for pre-approved Code Sec. 403(b) plans. Employers should not request ruling or determination letters on the form of their
Code Sec. 403(b) plans at this time, pending publication of the revenue procedure for pre-approved Code Sec. 403(b) plans and additional procedures on applying for individual determination letters for Code Sec. 403(b) plans.

Announcement 2009-89, 2009FED ¶46,555

Other References:

 
Code Sec. 403

  CCH Reference - 2009FED ¶18,282.077

  CCH Reference - 2009FED ¶18,282.11

  Tax Research Consultant

  CCH Reference - TRC RETIRE: 9,050
CCH Reference - TRC RETIRE: 51,100