Late 403(b) Plan Document

[panther]

A charity's president signed a vendor's "Plan Establishment Form" in 2008 thinking it was a 403(b) plan document. It was not -- it lacked the items required by 403(b) regs like eligibility and benefits description. So they had no plan document as of 12/31/09 as required.

I know the IRS is coming up with a retroactive amendment correction program if sponsors adopt a new 403(b) prototype when that becomes effective but Announcement 2009-34 says that relief applies only to periods after 1/1/2010. The relief does not apply to the 2009 tax year (the first year when a plan document was required). So for the 2009 year, we had no document. I'm thinking the charity needs to go through VCP to correct the 2009 year. My question -- has anyone done this already?

[Guest Catherine M. Peery]

Yes, we have used this a couple of times. Its very easy and inexpensive. Use Notice 2008-50, complete Appendix F I think it is. The user fee is only $375 if fixed within one year of the due date. Submit with the new document currently signed.

[panther]

Yes, we have used this a couple of times. Its very easy and inexpensive. Use Notice 2008-50, complete Appendix F I think it is. The user fee is only $375 if fixed within one year of the due date. Submit with the new document currently signed.

Thanks.

[panther]

Yes, we have used this a couple of times. Its very easy and inexpensive. Use Notice 2008-50, complete Appendix F I think it is. The user fee is only $375 if fixed within one year of the due date. Submit with the new document currently signed.

How could you use VCP to correct a 403(b) document failure? Rev. Proc. 2008-50 says VCP is not available for 403(b) document failures.

[Guest KVAlbert]

In fact. I just had a 403(b) document failure returned because it was not provided for in Rev Proc. 2008-50.

[Belgarath]

I believe I heard that the next iteration of the Revenue Procedure will include a "nonamender" fix for 403(b) plans. But I don't know if this will actually come to fruition, or when it will be. Doesn't help you much now...

[Kevin C]

According to the IRS's EPCRS phone forum in August, the updated Rev. Proc. is in the approval process. It will include corrections for 403(b) failures including failure to timely adopt a plan document. The discussion is on page 2 of the transcript.

http://www.irs.gov/pub/irs-tege/epcrs_phon..._transcript.pdf

[Guest AbbyP]

Is this still the case? That is, is there still no guidance for an employer that failed to adopt a written plan by 12/31/2009?

Thanks

[Kevin C]

It's still the same. The revised EPCRS Rev. Proc. still has not been released. The EP Phone Forum on EPCRS in August 2011 said the following:

The first set of questions are related to 403(b) plans, and actually with these questions, you’ll get an idea of what things we are able to address in the revenue procedure currently and what things we can’t. So, the first question is: Question one, if a 403(b) sponsor has no written plan, how do we correct?

S. Bennett: Well, under the current revenue procedure, a plan sponsor is not eligible to correct a

failure to timely adopt a written plan. Those VCP submissions are treated as ineligible

submissions and will be returned along with the submission fees. The current draft of the next

version of the revenue procedure will open up the program to allow for the correction of plan

document failures in 403(b) plans. But at this point, we would suggest that the plan sponsor

adopt a written plan now, and then go ahead and submit under VCP once the new revenue

procedure is issued.

That quote is copied from the transcript.

http://www.irs.gov/pub/irs-tege/epcrs_phon..._transcript.pdf

[Guest AbbyP]

Thanks Kevin C