Are 403(b) plans subject to the Code's prohibited transaction rules?

[Guest Gibson]

Are 403(B) plans subject to the Code's prohibited transaction rules?

[Carol V. Calhoun]

I assume you are talking about a governmental 403(B) plan, in which case the answer is no. Code section 4975 does not apply to governmental plans at all. Code section 503, which is the source for the prohibited transaction rules for governmental 401(a) plans, does not apply to 403(B) plans.

I should caution you, however, that applicable state law may in some instances impose requirements similar to the prohibited transaction rules.