Last Chance to Amend and Restate 403(b) Retirement Plan Documents

Tax-exempt and public-school employers who maintain 403(b) retirement plans for their employees must update their plan documents to comply with applicable legal qualification requirements (as opposed to individual design provisions) by no later than June 30, 2020 (Rev. Proc. 2019-39). The end date of this initial “remedial amendment period” was originally set for March 31, 2020, but the IRS extended this end date to June 30, 2020, due to the business disruption caused by the Coronavirus emergency. If timely adopted, these amendments will be effective all the way back to January 1, 2010.  

Initially, 403(b) retirement plans did not have a written plan document requirement. However, in 2007 the IRS issued regulations that created a new written plan document requirement (Treas. Reg. §1.403(b)-3(b)(3)(i)). The implementation of this new written plan document requirement for 403(b) retirement plans has been staggered over many years with an initial remedial amendment period that began January 1, 2010 and will now end on June 30, 2020. During this initial remedial amendment period employers may make retroactive amendments to comply with applicable legal requirements and the amendments will cover the period from January 1, 2010 through the date of the amendment. 

Most employers will be using IRS-approved 403(b) retirement plan documents developed by their funding vendors although some employers may still have individually designed documents. In any event, these amended and restated plan documents must be executed by no later than June 30, 2020 (i.e., the end of this month) in order to take advantage of the remedial amendment period opportunity to make the retroactive changes necessary to bring the plan into technical compliance with the legal requirements of the 403(b) statute and regulations. If you are an employer that has this process already underway, but have not yet executed the document, you should quickly move to execute the necessary documents. If for some reason you have not started this process, you should move quickly by contacting your funding vendor and see what sort of documents you can get in the next several weeks and make sure they are executed by the end of the day on June 30, 2020. 

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