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Reminder: 403(b) Plan Documents Deadline Coming Up

Sikich

Dec 7 2018

2 min read

The deadline for plan sponsors to update their 403(b) plan documents to a pre-approved plan is quickly approaching.

Background

On March 31, 2017, the Internal Revenue Service (IRS) issued a letter regarding pre-approved prototype plans in Revenue Procedure 2017-18. This stated that to ensure plan sponsors’ document language was compliant with the IRS, sponsors could update their plan documents to one of the IRS’s pre-approved plans by March 31, 2020.

Pre-approved Plan Documents

The new pre-approved plan documents provide an opportunity for a thorough review of compliance in plan operations and the ability to make necessary corrections during the remedial amendment period. Ultimately, adoption of a pre-approved plan offers protection from noncompliance issues that could result in penalties.

Most service providers for 403(b) plans have already received their IRS opinion letters and have contacted plan sponsors about this update. When completing the new document, plan sponsors should conduct a detailed assessment of their current processes to ensure that their new document appropriately reflects their plan provisions. Sponsors should also take precise care in completing the document to confirm accuracy, as failure to properly complete the document could result in significant penalties in the form of compliance fees and additional or unintended plan participant fees.

We recommend you consult with your service provider as soon as possible to begin the restatement process. Most organizations require board approval regarding the plan restatement and should therefore consider allotting adequate time to complete the process.

We also highly recommend that you engage ERISA counsel familiar with the provisions of your plan document provider to ensure a cost effective and accurate plan restatement process. If you are interested in receiving recommendations for assistance or have any questions regarding the process, please contact your Sikich consultant.

This publication contains general information only and Sikich is not, by means of this publication, rendering accounting, business, financial, investment, legal, tax, or any other professional advice or services. This publication is not a substitute for such professional advice or services, nor should you use it as a basis for any decision, action or omission that may affect you or your business. Before making any decision, taking any action or omitting an action that may affect you or your business, you should consult a qualified professional advisor. In addition, this publication may contain certain content generated by an artificial intelligence (AI) language model. You acknowledge that Sikich shall not be responsible for any loss sustained by you or any person who relies on this publication.

About the Author

Sikich

Sikich is a global company specializing in technology-enabled professional services. With more than 1,900 employees, Sikich draws on a diverse portfolio of technology solutions to deliver transformative digital strategies and is comprised of one of the largest CPA firms in the United States. From corporations and not-for-profits to state and local governments and federal agencies, Sikich clients utilize a broad spectrum of services* and products to help them improve performance and achieve long-term, strategic goals. *Securities offered through Sikich Corporate Finance LLC, member FINRA/SIPC. Investment advisory services offered through Sikich Financial, an SEC Registered Investment Advisor. 

Reminder: 403(b) Plan Documents Deadline Coming Up

Background

Pre-approved Plan Documents

Next Steps as a Plan Sponsor