Seyfarth Synopsis: In two months (on March 31, 2020), the window closes for 403(b) plan sponsors to take advantage of the unique opportunity to retroactively amend their 403(b) retirement plans to correct document errors retroactively all the way back to January 1, 2010.  After March 31, 2020, 403(b) plans likely will be subject to amendment deadlines that mirror 401(k) plans unless otherwise announced by the IRS.

Many may remember that as part of Treasury’s final 403(b) regulations that became effective in 2009, tax-exempt employers maintaining a 403(b) vehicle were required to adopt a written 403(b) plan document by January 1, 2010.  Further, certain changes in laws or regulations may result in a requirement that a retirement plan (including a 403(b) plan) be amended. When that happens, the sponsor has a period of time (referred to as a “remedial amendment period”) in which to adopt the amendment necessary to reflect the legislative or regulatory change.

While a 403(b) plan document had to be in place by January 1, 2010 (or the plan’s effective date, if later), more recently the IRS announced the last day of the remedial amendment period for 403(b) plans to reflect current statutory and regulatory requirements would be March 31, 2020.  Of particular interest, this remedial amendment period permits a 403(b) plan to be amended (or restated) to correct any form defect (i.e., a provision that does not comply with the tax code or regulatory guidance) retroactive all the way back to that initial date of January 1, 2010. This gives plan sponsors a chance to make any edits necessary to properly reflect the terms of the 403(b) plan, that may have been missed or drafted in error in the rush to get a written document in place.

A couple of noteworthy points:

  • If the employer desires to adopt an amendment and restatement back to January 1, 2010, the restatement will need to incorporate all plan provisions that applied at any time since January 1, 2010 (or effective date, if later) to the amendment/restatement date.
  • The remedial amendment relief applies only to form (i.e., document) failures – for example, absence of a required provision or misstatement of an optional or required provision.

Notably, operational or administrative failures (e.g., the plan was not administered in accordance with its terms) may not be fixed using this remedial amendment period. Rather, such failures will need to be handled separately through an IRS voluntary correction program, to the extent applicable.

As such, the remedial amendment period provides a unique opportunity to address any form defects in your 403(b) plan document, so long as the correction is adopted no later than March 31, 2020.

If you need assistance reviewing a plan document for compliance with 403(b) and related provisions, please contact your Seyfarth attorney.