IRS Checklist for 403(b) Plans

403(b) plans have been a benefits staple of nonprofit organizations for many years. Up until 2009, the Internal Revenue Service and Department of Labor paid these plans very little attention; regulatory guidance was sparse and reporting requirements minimal. This all changed when ERISA-covered plans were required to look and feel much more like their qualified plan counterpart, the 401(k) plan. To that end, both the IRS and DOL have undertaken various outreach activities aimed at keeping 403(b) plans compliant and protecting plan participants.

Recently, the IRS updated the 403(b) Plan Checklist that it publishes on its website. This is a good tool for employers to use as a starting point for managing their plan. The goal in maintaining any employer plan is to not be asleep at the wheel, so to speak, and to find errors as soon as possible. It’s very easy to make mistakes while maintaining a plan and the regulatory agencies recognize this. The key is to understand that managing a plan is a real responsibility that takes time and effort.

The checklist addresses many of the areas that pose difficulties for 403(b) plan sponsors. Fundamentally, the plan needs to be in writing and it needs to be operated based on the written provisions. This is the most important of all retirement plan administration tenets. The Internal Revenue Code has myriad limits that need to be adhered to, and exceeding any of these limits results in corrective action being required by plan sponsors. Unlike other retirement plans, 403(b) plans are subject to the Universal Availability Rules and plan sponsors seem to lose track of this unique feature. The checklist provides a description of these requirements and several others, along with a summary of how to proceed in the event an error has occurred.

Got questions? Connect with an experienced Aprio advisor today.
Schedule a Consultation