Egtrra

[Guest JBeck]

Some EGTRRA provisions apply starting January 1, 2002. Should 403(B) plans be amended prior to such date to comply? Are they required to be amended by such date? For qualified plans the IRS permits the amendments to be made generally by the end of 2002. Is there any simiar rule for 403(B) plans?

[Carol V. Calhoun]

403(B) plans are not explicitly given a remedial amendment period. Thus, the safest course would be to amend them before the beginning of the period to which the changes relate. And in the case of governmental plans, even that may be a problem under applicable state constitutional provisions or statutes. I can foresee this becoming a big issue, and wonder whether the IRS is considering some relief in this area.

[MWeddell]

We ran into this issue regarding the GUST amendments, and here's what we found out from conversations with IRS and DOL officials.

There is no Internal Revenue Code requirement that a 403(B) plan have a written plan document. Therefore, the IRS feels it does not have statutory authority under Code Section 401(B) to declare a remedial amendment period for 403(B) plans.

For plans subject to ERISA, they must be administered in accordance with a written plan document. However, the DOL has never (to my knowledge) stated how promptly amendments are needed to comply with this requirement. Certainly, there were many ERISA plans amended in 1994 effective in 1987 and the DOL never complained that those amendments were so tardy as to violate ERISA's written plan requirement.

To be safe, amend as Carol suggested but realize that if one misses the "deadline" it doesn't necessarily mean there's a violation.

[LIBERTYKID]

On a similar issue, did the IRS/DOL say anything about "terminated " 403(B) plans being amended for current law. I know of a number of organizations that have gone out of business but are having someone sign the form 5500 for subsequent years because it seems that the form must be siged by someone. do these "terminated" plans have to also be amended?

[MWeddell]

I've not specifically asked that questions, JonB. If terminated after some of GUST became effective, I believe the DOL would expect that those plans would eventually be amended.

[Carol V. Calhoun]

Thanks for your input, MWeddell! Obviously, this doesn't necessarily take care of any state law issues caused by late amendments, but it at least means that the IRS won't be knocking at the door of the late amenders.