What deadlines apply to 403(b) plans

Jan 05, 2024

Written by Linda Segal Blinn

Whether you are a school business official or a human resources employee of a nonprofit organization, chances are that you are juggling so many responsibilities that your time is at a premium. Knowing deadlines for amending your employer’s 403(b) plan document helps keep that plan compliant.

When did an employer first need to adopt a 403(b) plan?

Internal Revenue Service (IRS) guidance required that public schools and 501(c)(3) organizations (with a limited exception for certain church and church-related organizations) that offered a 403(b) plan to adopt a written plan no later than December 31, 2009.

After 2009, the IRS established a series of 403(b) plan document restatement cycles — known as remedial amendment periods — to keep a 403(b) plan current, both in terms of IRS requirements and optional plan design features offered under that employer’s 403(b) plan. Whether a plan sponsor adopted an IRS pre-approved 403(b) plan document or maintained its own individually designed 403(b) plan document, the deadline for the first remedial amendment period was the same — June 30, 2020.

What is the purpose of a remedial amendment period? 

A remedial amendment period enables an employer that timely adopted a 403(b) plan to retroactively correct that plan document by modifying an existing provision or adding an omitted provision. Such a correction mechanism enables the 403(b) plan document to continue to meet the IRS regulatory requirements of a written plan.

To be eligible for such retroactive correction, the employer must have adopted its 403(b) plan in accordance with the applicable IRS deadline:

  • For the first remedial amendment period that closed on June 30, 2020:  an employer that had timely adopted its 403(b) plan document by December 31, 2009 was able to correct 403(b) plan document provisions to align with the IRS rules retroactive to January 1, 2010.
  • For the second remedial amendment period (which the IRS has not yet opened): an employer that had timely adopted its 403(b) plan document by June 30, 2020 will be able to correct 403(b) plan document provisions to align with the IRS rules retroactive to July 1, 2020.

If a plan sponsor has timely adopted a 403(b) plan by June 30, 2020, does that mean that the 403(b) plan does not need to be amended until the next remedial amendment period?

No, a 403(b) plan document will still need to be amended before the next remedial amendment period to: 

  • reflect recent Internal Revenue Code requirements and related IRS guidance; and
  • include any additional optional plan design features.

What is the deadline for amendments to a 403(b) plan before the next remedial amendment period?

Starting in 2019, the IRS has maintained an annual Required Amendment List, identifying federal legislative and regulatory changes for 403(b) plans that are first effective during the plan year in which that year’s Required Amendments List is published. 

In the absence of a federal legislative that imposes a specific plan amendment deadline, the following summarizes when a 403(b) plan document (whether IRS pre-approved or individually designed) must be amended: 

Deadline to adopt the amendment: 

Type of Amendment* 501(c)(3) Nonprofit Organization Public School
Changes to Internal Revenue Code requirements By December 31st of the 2nd calendar year that begins after the issuance of the IRS Required Amendments List in which the change appears. 

By the later of: 

  • December 31st of the 2nd calendar year that begins after the issuance of the IRS Required Amendments List in which the change appears; or
  • if a modification of state or local law is needed to conform with the Internal Revenue Code and IRS regulations, 90 days after the close of the 3rd regular legislative session of the legislative body with the authority to amend the plan that begins on or after the date of issuance of the Required Amendments List in which the change appears. 
Changes in plan design By the last day of the plan year in which the amendment is effective.

By the later of: 

  • the last day of the plan year in which the amendment is effective; or
  • if a modification of state or local law is needed to authorize the plan design modification, 90 days after the close of the 2nd regular legislative session of the legislative body with the authority to amend the plan that begins on or after the date on which the amendment is effective. 

*The 403(b) plan must be operated in compliance with the applicable amendment as of the effective date of that amendment. The IRS provides an Operational Compliance List to assist employers in operating their 403(b) plans in accordance with the Internal Revenue Code modifications effective in that calendar year.

What would be an example of a federal legislative provision that impacts an amendment for either a plan design change or to meet federal legislative and regulatory changes?

Federal law that provides for optional or mandatory plan amendments may include a deadline for when a plan must be amended. For example, SECURE Act 2.0 (the “Act”) permits an employer to adopt a provision of the Act that is effective in 2023, but has (as applicable) until:

  • December 31, 2026 (plans not subject to collective bargaining agreements and sponsored by nongovernmental employers);
  • December 31, 2028 (plans subject to collective bargaining agreement of a 501(c)(3) tax exempt organization); or
  • December 31, 2029 (plans sponsored by a public school)

to amend its 403(b) plan to reflect the change.

What happens if an employer intended to adopt an IRS pre-approved 403(b) plan document, but did not sign the amendment for an IRS pre-approved plan by the June 30 deadline?

If an employer did not timely adopt a restated IRS pre-approved 403(b) plan document by June 30, 2020, that employer is now considered to have adopted an individually designed 403(b) plan document. 

An employer that did not timely adopt a current pre-approved 403(b) plan may nevertheless still satisfy the IRS written plan regulatory requirements as an individually designed 403(b) plan. If the employer (together with its legal counsel) determines that corrections to the individually designed 403(b) plan document are warranted, those corrections can be resolved in accordance with the IRS’ Employee Plans Compliance Resolution System.

If the employer wants a favorable ruling on its individually designed 403(b) plan as initially adopted, the IRS will accept applications for a determination letter such plans, based on that employer’s employer identification number:

If the EIN of the Plan Sponsor ends in: A determination letter application may be submitted beginning on:
1,2, or 3 June 1, 2023
4,5,6, or 7 June 1, 2024
8,9, or 0 June 1, 2025

Best practices

  • Coordinate with your plan document provider regarding deadlines for amending the 403(b) plan for plan design changes and for federal legislative/regulatory requirements.
  • Authorize an individual to be responsible for timely adopting plan amendments to the 403(b) plan. 
  • Authorize an individual to be responsible for timely adopting plan amendments to the 403(b) plan. 

 

Resources

 

This article has been updated; it was originally published on Nov. 10, 2022. 

 

 

 

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Note: in this article, employers and plan sponsors are used interchangeably.

This information is provided by Voya for your education only. Neither Voya nor its representatives offer tax or legal advice. Please consult your tax or legal advisor before making a tax-related investment/insurance decision.

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