IRS Releases Proposed 403(b) Prototype Document Program

The Internal Revenue Service (IRS) used PLANSPONSOR's 403(b) Summit to unveil the next step in the tax agency’s efforts to move 403(b) plans closer to their 401(k) cousins.

Robert J. Architect, IRS Senior Tax Law Specialist, opened the 403(b) Summit in Orlando, Florida by telling attendees that the tax agency considers issuance of the draft revenue procedure and sample plan language supporting it to be significant steps in the evolution of 403(b) regulations. A determination letter could be released as soon as the first quarter of 2010.

“This is the date that 403(b) enters the modern era,” said Architect, who has been the tax agency’s chief spokesman about 403(b) regulation issues. “We don’t see the future. The future is today.”

Architect said the agency has released:

  • Draft Revenue Procedure 2009-34 that explains how the IRS proposes to run the 403(b) version of the program.
  • 65 to 70 page of sample plan language to support the proposed prototype (see IRS Publishes Sample 403(b) Prototype Document Language).
  • a request for public comments about the prototype proposal by June 1, 2009.

Architect said the IRS anticipates that a prototype submission would primarily come from vendors who anticipate having at least 30 plans adopting the prototype. After it is approved, Architect said the adopting plan sponsors would sign an adoption agreement that would set out how they are customizing the benchmark plan provisions to their own plans.

He said that when the prototype reviews begin, the IRS will be concentrating on whether the document has the proper form. He made a particular point out of saying the IRS will not be reviewing plan funding mechanisms. “That would really bog the program down so we don’t review these,” Architect said.

He indicated that the prototype plans would not provide for vesting and would not apply to church plans or those from related church organizations.

Architect wrapped up his comments by urging the assembled 403(b) sponsors and advisers to 403(b) plans to maximize the transitional relief provided by the IRS to the end of December 2009 to get their required written plan documents in order.

“Use the time constructively up to 12/31/2009,’ Architect said. “I hope we don’t receive letters saying “Please, please I need more time.’ This is the more time.’

The proposed Revenue Procedure is avalable here.

Interested persons are invited to comment on the draft revenue procedure, the sample plan language draft, or any other aspect of the § 403(b) prototype plan program, generally.

Written comments should be submitted by June 1, 2009, to CC:PA:LPD:PR (Announcement 2009-34), Room 5203, Internal Revenue Service, POB 7604, Ben Franklin Station, Washington, D.C. 20044. Comments may be hand delivered Monday through Friday between the hours of 8 a.m. and 4 p.m. to CC:PA:LPD:PR (Announcement 2009-34), Courier’s Desk, Internal Revenue Service, 1111 Constitution Ave., NW, Washington, D.C.

Alternatively, comments may be submitted via the Internet at