When did mutual funds become 403(b)eligible?

[Guest John L. Olsen, CLU, ChFC]

I have a client whose attorney insists that mutual funds only recently became approved for use in 403(B) plans. I would appreciate any references to authority for their use in such plans. Thanks.

[Carol V. Calhoun]

The authority is Internal Code section 403(B)(7). I don't have the exact date on which that was added to the Code, but it's at least 20 years ago.

[Guest DianeC]

403(B)(7) was added to the IRC by ERISA. Effective January 1, 1974 Congress added to the statute another method of funding in addition to annuities - that is investment in the stock of a regulated investment company. A "bank" custodian is required and the investment is made in regulated investment company stock - i.e.mutual funds.