The IRS announced today that 403(b) retirement plans will now be eligible for the program.
The IRS and the U.S. Treasury Department announced on Monday that one of their programs for approving retirement plans has been expanded. Certain public schools, churches, and charities can now use the same individually created retirement plan determination letter program that is currently used by qualified retirement plans thanks to the IRS.
This expansion is described in detail in Revenue Procedure 2022-40, which also contains other changes that have an impact on individually designed retirement plans. The guidance includes the following notable additions for 403(b) retirement plans:
- Expansion of initial plan determination: Starting June 1, 2023, sponsors of 403(b) retirement plans may submit applications for determination letters for all initial, individually designed retirement plans. These applications will be based on the sponsors’ employer identification numbers (EINs). (For more information, see Revenue Procedure 2022-40, Section 12.)
- Terminations: Starting on June 1, 2023, sponsors of 403(b) retirement plans may, without regard to their EIN, request a determination letter upon the termination of the plan on a Form 5310, Application for Determination for Terminating Plan, or at any time thereafter.
Procedures for submitting and handling uniquely designed retirement plans have undergone some significant changes, including:
- Prior correspondence with a pre-approved plan adopter is not regarded as a determination regarding the initial plan: When determining whether a plan sponsor is qualified to submit a determination letter for an initial plan determination on a Form 5300, Application for Determination for Employee Benefit Plan, 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 taken into account.
- Subject to any specified modifications to the annual employee plans revenue procedure, which outlines the administrative and procedural rules for determination letters, the IRS will typically take into account in its review qualification requirements and section 403(b) requirements that are in effect or that have been added to 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, currently Revenue Procedure 2022-4.
All submissions of individually created retirement plans are subject to these regulations.
The soon-to-be-released Revenue Procedure 2023-4, currently under development, will include additional modifications to the procedural specifications for plan submissions, such as the gradual implementation of the requirement for determination letter requests to be submitted electronically. These changes will also be reflected in Forms 5300 and 5310.
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