Opinion Letter Program for 403(b) Plans Set to Launch April 1

An Internal Revenue Service (IRS) official said the agency has set April 1 as its target date for launching an opinion letter program for prototype and volume submitter 403(b) plans, BNA reported.

At the annual Washington Non-Profit Legal & Tax Conference, Jason Levine, an IRS employee plans tax law specialist, said the program launch will coincide with a redesign of the agency’s Web site information on 403(b) plans, according to BNA.

Levine said the opinion letter program for 403(b) prototype plans will review only plan documents and adoption agreements, and if a plan document and its investment documents contain conflicting provisions, the plan document “will control.” Levine also told attendees that the prototype and volume submitter plan rules will permit the use of vesting schedules based on tax code Section 411, and will also almost certainly contain provisions for church plans – issues brought up in comments to the IRS about the program (see “403(b) Prototype Likely to Allow for Vesting Schedules”).

Plan sponsors that failed to comply with a new requirement to adopt a written plan document by December 31 are ineligible to participate in a remedial amendment program that IRS announced in December (see “IRS Offers Assurance until 403(b) Prototype Program Begins”). Sponsors that missed the deadline will have to enroll in the IRS Employee Plans Compliance Resolution System program, which IRS is updating to include corrections procedures for plan document failures, Levine said, according to BNA.

New Index Tracks Prices of Commodity, Financial Futures Contracts

Standard & Poor's has launched the S&P Dynamic Futures Index (S&P DFI).

A press release said the S&P DFI is designed to reflect the price momentum that physical commodities, interest rates, and currencies tend to exhibit over the long-term due to their cyclicality. The index offers rules-based exposure (both long and short) across a diversified portfolio of 24 highly liquid, global commodity, and financial futures contracts grouped into 14 sectors.

The S&P DFI is comprised of 24 components (or futures contracts), grouped into 14 sectors (eight financials and six commodity), equally divided by weight. The financials include eight global financials futures contracts, while the commodities include 16 traditional, physical commodity components grouped into six sectors. Long or short positions are determined by measuring the current sector price relative to an exponential moving average, according to the announcement.

Index constituent target weights are updated annually in order to ensure that their weights in the S&P DFI reflect current economic and production realities. For physical commodities, the target weights are updated to reflect the world production weights of the same commodities in the S&P GSCI Light Energy Index. In a similar way, the target weights in the financial futures contracts are updated each year based on the relative size of the GDP of the country represented by the contract.

“With the ability to go long or short sectors, the S&P DFI is designed to capture the economic benefit over long time periods derived from both rising and declining trends within a cross-section of the futures markets,” said Michael McGlone, Senior Director of Commodity Indices for S&P Indices, in the announcement. “The Index is also designed to be tradable and readily accessible to market participants.”


More information is at www.spgsci.standardandpoors.com.

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