March 31, 2020 is the deadline for retroactively correcting most 403(b) plan document defects that occurred on or after January 1, 2010. These defects can be corrected by amending an individually-designed 403(b) plan or by adopting a pre-approved prototype or volume submitter 403(b) plan.
Employers who adopt a pre-approved 403(b) plan by March 31, 2020 can rely on the pre-approved plan’s IRS opinion or advisory letter regarding its compliance with 403(b). Employers who adopted a prototype or volume submitter 403(b) plan before the plan sponsor received an IRS opinion or advisory letter for the plan will likely have to adopt a restated plan to rely on such letter. These employers should contact the prototype company as soon as possible to discuss the need to adopt a restated plan, if they have not done so already.
Whether an employer is adopting a pre-approved 403(b) plan or restating an existing prototype or volume submitter 403(b) plan to rely on its IRS opinion or advisory letter, the employer should engage counsel to carefully review the terms of the new or restated plan to make sure that they accurately reflect the employer’s prior plan design decisions. For example, issues may arise where a change in plan terms requires the employer to make a new affirmative election. The adoption or restatement of a 403(b) plan also provides an opportunity to make plan design changes.