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CCH® PENSION AND BENEFITS — 12/29/08

IRS to open pre-approved program for 403(b) plans, says key official

The IRS’s Employee Plans (EP) unit intends to open a pre-approved program for vendors of prototype 403(b) plans, EP Tax Law Specialist Robert Architect announced on December 4, 2008, in an IRS phone forum.

EP hopes to issue a revenue procedure before the end of 2008 that will describe the program and that will include 65 to 75 pages of plan modification language that can be used to devise prototype plans, Architect indicated. The public will then have 45 days to comment. EP plans to implement the pre-approved program in the first six months of 2009. The advantage of a prototype program, Architect explained, is that, once the vendor has obtained IRS approval for a model plan, any employer adopting the prototype can rely on the same IRS approval.

After implementing the pre-approved program, the IRS will open a determination letter program for individual plans, Architect said. EP will also update the Employee Plans Compliance Resolution System (EPCRS) to apply to 403(b) plans. The IRS official noted that EP is not updating the sample language in Rev. Proc. 2007-71 because the pre-approval program will provide sample language for more complex provisions such as matching contributions, Roth contributions, and discretionary employer contributions.

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