Faculty Early Retirement Plans

[Guest Albert Lin]

I posted this message on the 403(b) discussion group but this one seems more popular:

Hello:

Is anyone here familiar with faculty early retirement plans (FERPs)? We have a client who is considering implementing such a plan. One benefit would be the continued contributions towards an existing 403(b) annuity plan.

In particular I am hoping someone can point me towards a good reference source. I've reviewed many research sources and none adequately explain how a proper Plan Amendment can be drafted without violating the nondiscrimination rules.

The regulations contain references to early retirement windows, but these references appear to be within the context of defined benefit plans and not defined contribution plans/403(b)s.

I have seen two letter rulings discussing FERPS within 403(b)s, but they annoyingly state that the IRS is expressing no opinion as to whether the FERP has a nondiscriminatory impact. I imagine you simply apply the general safe harbor rules under Notice 89-23, but only because I have no better guidance.

Any help would be appreciated!

Albert