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All News > 403(b) Plans and Annuities

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The 403(b) Lifecycle
403bwise Link to more items from this source
Nov. 29, 2022

"This post briefly describes each of the twelve stages of the 403(b) Lifecycle.... [It] captures a series of plan-related events that could last up to 70 or 75 years (e.g., a teacher that starts working at age 22 and lives to age 97). Research results, three 'need to know' facts, and six take-away action steps conclude this discussion."

Tags: 403(b) Plans and Annuities

New Determination Letter Program for 403(b) Plans
Buck Link to more items from this source
[Guidance Overview]
Nov. 23, 2022

"Given the advantages of receiving a favorable determination letter from the IRS, plan sponsors of individually designed 403(b) plans may want to consider filing for a determination letter in accordance with the new program. Reviewing the guidance and examples provided in Revenue Procedure 2022-40 should assist plan sponsors in understanding when they can apply for an initial determination for their plan."

Tags: 403(b) Plans and Annuities

New 403(b) Plan Determination Letter Program
Groom Law Group Link to more items from this source
[Guidance Overview]
Nov. 18, 2022

"For the first time ever, 403(b) plan sponsors can request an IRS determination letter for their 'individually designed' 403(b) plans on initial plan qualification, on plan termination, or in other limited circumstances to be established by the IRS. The program opens June 1, 2023, with a staggered schedule for initial plan qualification requests."

Tags: 403(b) Plans and Annuities

IRS to Permit Determination Letters in Limited Circumstances for Individually Designed Section 403(b) Plans
The Wagner Law Group Link to more items from this source
[Guidance Overview]
Nov. 18, 2022

"With two very limited exceptions -- a TEFRA church defined benefit plan and a plan grandfathered under Rev. Rul. 82-102 with respect to deferrals made to a credit union -- the new program will be available to all individually designed 403(b) plans. However, if there were any form defects in an individually designed 403(b) plan, a favorable determination letter will only be available for the plan if: [1] the error first occurred after June 30, 2020, and [2] it is corrected by the last day of the second calendar year following the year in which the form defect first occurred."

Tags: 403(b) Plans and Annuities

Editor's Pick IRS Signals Employers Will Have Less Discretion Over Discretionary Match
Mercer Link to more items from this source
[Guidance Overview]
Nov. 17, 2022

"IRS recently noted in Q&As on the 403(b) preapproved plan program's second remedial amendment cycle....that 403(b) plan documents submitted for preapproval must include provisions on the computation period and allocation formula for a discretionary match. This likely means that, going forward, all employers using preapproved documents for their defined contribution (DC) plans -- 403(b) and qualified -- should expect to specify these terms in newly adopted documents."

Tags: 401(k) Plans  •  403(b) Plans and Annuities

IRS Opens Determination Letter Program to 403(b) Plans
Ice Miller LLP Link to more items from this source
[Guidance Overview]
Nov. 15, 2022

"Plans with more complicated designs ... are difficult to fit onto pre-approved plan documents due to their 'check the box' format and limited election options.... Plan sponsors with multiple approved service providers may be concerned about the appearance of endorsing a particular provider by using its pre-approved plan document. These plan sponsors will want to consider requesting a determination letter[.]"

Tags: 403(b) Plans and Annuities  •  Retirement Plan Amendments

The 'Entity' Difference Between 403(b) and 401(a) Plans
Business of Benefits Link to more items from this source
[Opinion]
Nov. 15, 2022

"The favorable tax status granted to 403(b) plan participants does not derive from the tax exempt status of any particular organization or entity.... Its relevance arises when we assess how to implement the tremendous changes that we see on the horizon, whether it be implementing ... unique lifetime income vehicles, PEPs, collective trusts, or any other of the sort of the innovative programs being develop which are designed to enhance retirement security."

Tags: 403(b) Plans and Annuities

New IRS Revenue Procedure for 403(b) Plans
Boutwell Fay LLP Link to more items from this source
[Guidance Overview]
Nov. 11, 2022

"[F]or the first time, an individually designed 403(b) plan will be able to rely on the IRS' approval that the form of the document meets all IRS requirements. [Rev. Proc. 2022-40] generally follows the rules that apply to determination letter requests filed by sponsors of qualified plans."

Tags: 403(b) Plans and Annuities

New IRS Determination Letter Program for 403(b) and 401(a) Plans
Verrill Dana LLP Link to more items from this source
[Guidance Overview]
Nov. 11, 2022

"Employers who are terminating (or who have recently terminated) 403(b) plans should consider seeking an IRS determination letter ... Employers who have adopted preapproved plans but have substantially changed the plan documents to accommodate unique plan features should consider applying for an IRS determination letter on their plan documents."

Tags: 403(b) Plans and Annuities  •  Retirement Plan Amendments

Broward County's Hidden (b) Plan
The Teacher's Advocate Link to more items from this source
[Opinion]
Nov. 10, 2022

"Broward is one of the few public school employers who went through the complicated process of taking their plan out to bid. They did a pretty good job, but they don't want anyone to know about it for some reason. This is baffling; it's also a mistake."

Tags: 403(b) Plans and Annuities  •  Local Regulation  •  State and Local Government Plans

403(b) Plans May Apply for IRS Determination Letters Starting Next June
PLANSPONSOR; free registration may be required Link to more items from this source
[Guidance Overview]
Nov. 9, 2022

"Under Revenue Procedure 2022-40 the determination letter process will now become available to 403(b) plans.... It will streamline the process of plan adoption and make it more similar to the process for qualified retirement plans, like 401(k) plans.... [T]hough this is 'good news for many,' those sponsors of long-standing 403(b) plans that seek determination letters may have long-standing flaws revealed as part of the process."

Tags: 403(b) Plans and Annuities  •  Retirement Plan Amendments

Text of IRS Rev. Proc 2022-40: Rulings and Determination Letters for Individually Designed Qualified and Section 403(b) Plans (PDF)
Internal Revenue Service [IRS] Link to more items from this source
[Official Guidance]
Nov. 7, 2022

22 pages. "[A] Plan Sponsor that maintains a section 403(b) individually designed plan will be permitted to submit a determination letter application for an initial plan determination, for a determination upon plan termination, and in certain other circumstances identified by the IRS ... The earliest date a Plan Sponsor will be permitted to submit a determination letter application for a section 403(b) individually designed plan is June 1, 2023 ...

"This revenue procedure also [1] incorporates modifications of Rev. Proc. 2016-37 set forth in Rev. Proc. 2019-20 ... relating to the submission of determination letter applications for a determination with respect to Merged Plans, (2) clarifies and modifies the provisions of Rev. Proc. 2019-39 ... that relate to the Remedial Amendment Period for section 403(b) individually designed plan Form Defects first occurring after June 30, 2020, [3] extends the expiration of the Remedial Amendment Period for new qualified individually designed plans, [4] modifies the circumstances under which a plan is considered to have been issued an initial plan determination, and [5] modifies the scope of review of qualified individually designed plans submitted under the determination letter program.

"This revenue procedure does not modify or restate the provisions of Rev. Proc. 2016-37 relating to qualified pre-approved plans."

Tags: 403(b) Plans and Annuities  •  Retirement Plan Amendments

Yale 403(b) Fiduciary Breach Counts Withstand Motions to Dismiss
PLANSPONSOR; free registration may be required Link to more items from this source
Nov. 1, 2022

"The judge allowed to proceed to trial plaintiffs' claims that Yale 'breached its fiduciary duty to monitor and avoid unreasonable recordkeeping fees with respect to the plaintiffs' contentions that Yale imprudently delayed consolidating to a single recordkeeper, failed to obtain competitive bids, used asset-based pricing and failed to prohibit TIAA from cross-selling' ... Plaintiffs' argument [that] Yale plans fiduciaries engaged in mismanagement and imprudent acts, which resulted in losses to the plan, will also proceed." [Vellali v. Yale Univ., No. 16-1345 (D. Conn. Oct. 21, 2022)]

Tags: 403(b) Plans and Annuities  •  Fiduciary Duties

SECURE 2.0's 403(b) PEP Rules Will Be, Well, Different
Business of Benefits Link to more items from this source
Oct. 21, 2022

"403(b) PEPs are going to be enabled through changes to 403(b), and not by simply including them in the definitional sections of 413(e), and through changes to ERISA's PEP language under Sections 3(43) and 3(44). This is critically important because had Congress chosen to simply amend 413(e), it would have opened a Pandora's box of details which would have demanded clumsy (and perhaps extensive) regulatory fixes."

Tags: 403(b) Plans and Annuities  •  Retirement Plan Design

Cybersecurity: Insights and Action Steps
National Tax-Deferred Savings Association [NTSA] Link to more items from this source
Oct. 19, 2022

"Cyber criminals are creative and resourceful -- and they're not just after bank accounts. Industry experts in a recent webinar cautioned that retirement plans are in their sights as well."

Tags: 401(k) Plans  •  403(b) Plans and Annuities  •  Cybersecurity

Kentucky Deferred Comp is on Your Side
403bwise Link to more items from this source
[Opinion]
Oct. 4, 2022

"Kentucky Deferred Comp ... [is] one of the most impressive state-run supplemental savings programs available to public school teachers ... [It's] not just an impressive 457(b). It's also an impressive 401(k), Roth IRA and traditional IRA. Both the 457(b) and the 401(k) plans are automatically available to all Kentucky school employees.... [A] K-12 school employee in Kentucky [has] exactly ZERO reasons to contribute to a 403(b)."

Tags: 403(b) Plans and Annuities  •  Local Regulation  •  State and Local Government Plans

Amid Economic Uncertainty, Nonprofits Enhancing 403(b) Retirement Plans for Employees
Principal Financial Group Link to more items from this source
Sept. 30, 2022

"[E]mployer contribution rates to 403(b) plans rose almost 24% year-over-year from 4.6% in 2020 to 5.7% of gross annual pay in 2021 ... An average of 79.4% of eligible employees made contributions to their plans in 2021, an increase from 77.2% in 2020."

Tags: 403(b) Plans and Annuities

More Save More, Sooner in 403(b) Plans
American Retirement Association [ARA] Link to more items from this source
Sept. 29, 2022

"While not yet back to pre-COVID levels, average deferral rates are up, more participants are contributing, more plans are permitting immediate eligibility, and employer contribution rates to 403(b) plans rose almost 24% year-over-year[.]"

Tags: 403(b) Plans and Annuities

What's My Limit? Contributions to Both a 403(b) and a Governmental 457(b) Plan
Retirement Learning Center, LLC Link to more items from this source
[Guidance Overview]
Sept. 26, 2022

"Since 2002, contributions to 457(b) plans no longer reduce the amount of deferrals to other salary deferral plans, such as 401(k) or 403(b) plans. A participant's 457(b) contributions need only be combined with contributions to other 457(b) plans when applying the annual contribution limit.... Consequently, an individual who participates in both a governmental 457(b) plan and one or more other deferral-type plans, such as a 403(b), 401(k), salary reduction simplified employee pension plan, or savings incentive match plan for employees has two separate annual deferral limits."

Tags: 403(b) Plans and Annuities  •  457 Plans

Debate: Is Defaulting 401(k) Participants Into Annuities in Their Best Interest?
ThinkAdvisor Link to more items from this source
[Opinion]
Sept. 23, 2022

"One provision in the [SECURE Act] provides extra assurance and protection to retirement plan sponsors that follow certain rules to select annuities as in-plan offerings.... [ThinkAdvisor] asked two professors and authors of ALM's Tax Facts with opposing political viewpoints to share their opinions about whether retirement plans should default 401(k) participants into annuity options."

Tags: 403(b) Plans and Annuities  •  Retirement Plan Design  •  Retirement Plan Investments

403(b) Plans Aren't Just for Teachers
Dr. Barbara O'Neill, via 403bwise Link to more items from this source
Sept. 19, 2022

"This post describes who is eligible to participate in 403(b) plans, IRS universal availability rules, financial challenges of non-teachers, steps to get started with -- and educated about -- 403(b)s, emergency withdrawal options, and success stories of wealthy 403(b) non-teacher participants. Research results, three 'need to know' facts, and six take-away action steps conclude this discussion."

Tags: 403(b) Plans and Annuities  •  Retirement Plan Design

Can Your Hospital District Have a 403(b) Plan?
Best Best & Krieger LLP Link to more items from this source
[Guidance Overview]
Sept. 14, 2022

"[T]he fact that a particular entity is exempt from federal and state income taxes ... can be based on the fact that the district is a 'local government' agency that is also exempt from taxes.... [M]any retirement plan advisers and consultants often 'assume' that 'tax-exempt' status means section 501(c)(3) status; they proceed to recommend and set-up a 403(b) when the client-entity involved does not have the right type of tax-exempt status."

Tags: 403(b) Plans and Annuities

Some School Districts Are Improving Their 403(b) Plans
403bwise Link to more items from this source
[Opinion]
Sept. 13, 2022

"We recently heard from two school districts asking us to change their grade based on plan changes they have made. This is exactly what we hoped the grading system would do: Drive change."

Tags: 403(b) Plans and Annuities

Safekeeping the Written 403(b) Plan
VOYA Financial Link to more items from this source
Aug. 17, 2022

"The IRS guidance provides that there must be a written 403(b) plan, but does not require that there be a written 403(b) plan document. A written 403(b) plan may consist of materials that collectively contain the plan provisions, such as salary reduction agreements, employee handbooks, investment contracts, and collective bargaining agreements."

Tags: 403(b) Plans and Annuities

Text of IRS Notice 2022-33: Extension of Retirement Plan Amendment Deadlines (PDF)
Internal Revenue Service [IRS] Link to more items from this source
[Official Guidance]
Aug. 3, 2022

"Notice 2022-33 extends the deadlines for amending a retirement plan or individual retirement arrangement to reflect certain provisions of Division O of the [SECURE Act], and ... the Bipartisan American Miners Act of 2019 (Miners Act), by modifying Notice 2020-68 ... and Notice 2020-86... In addition, this notice extends the deadline for amending a retirement plan to reflect the provisions of section 2203 of the [CARES Act].

"[T]he extended amendment deadline for [1] a qualified retirement plan or section 403(b) plan (including an applicable collectively bargained plan) that is not a governmental plan or [2] an IRA is December 31, 2025. Later deadlines apply with respect to governmental retirement plans (including governmental plans under section 457(b) of the Internal Revenue Code)."

Tags: 401(k) Plans  •  403(b) Plans and Annuities  •  457 Plans  •  CARES Act  •  Retirement Plan Amendments  •  SECURE Act

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