mcw

RAP and old plan document

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mcw    0

Rev. Proc. 2017-18 provides that the RAP begins on 1/1/10 and ends on 3/31/20.  Therefore, a 403(b) plan sponsor can adopt a prototype or VS plan by 3/31/20 retroactive to 1/1/10 and correct any issue with the old plan document.  However, a condition to this extended RAP is that the plan sponsor adopt a written plan document “intended to satisfy the §403(b) requirements” before 1/1/10.  Announcement 2009-89 says that you have to adopt a written plan document that is intended to satisfy the requirements of §403(b) “and the regulations” before 1/1/10.  I have been contacted by a client to restate their 403(b) plan.  However, the only written plan document they can find is a Corbel document signed in 2001.  My question is do you think they qualify for the 3/31/20 RAP and can just restate the document retroactive to 1/1/10?  My thought is that the 2001 plan can’t have “intended to satisfy the regulations” because it was signed before the 2007 regs were issued.  I hope I am wrong and can avoid VCP.

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I believe that you can avoid VCP.  Rev. Proc. 2017-1 merely says that the written plan must have been“intended to satisfy the §403(b) requirements.” It does not say the written plan document must have been intended to satisfy the requirements of either the regulations or Announcement 2009-89.  Since the plan you've got was a written plan document (which is all that either the regulations or Announcement 2009-89 would have required, anyway), it should satisfy the requirements.

And that makes perfect sense.  Both the regulations and Announcement 2009-89 were intended to interpret the 403(b) requirements.  However, they were made prospective only, to reflect the fact that employers may not have realized before 2009 that 403(b) should be interpreted so as to require a written plan document.  To the extent that employers did interpret 403(b) as requiring a written plan document before 2009, and complied before the regulations and the Announcement came out, they should not be penalized for doing what was necessary even earlier than the IRS would have required it.

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