restating 403(b) plan document

Why do I need to restate my 403(b) plan document?

All organizations sponsoring 403(b) plans must now “restate” their plan documents onto an IRS approved document by March 31, 2020. Restatement on an IRS pre-approved plan gives the sponsoring organization reliance that the provisions in the pre-approved plan are compliant with IRS rules and regulations and that the plan assets are protected from taxation. The IRS approvals of these documents are being issued now.

Frequently Asked Questions About The 403(b) Plan Restatement

Q: Is a 403(b) required to have a “plan document”?
A: Yes, the legal requirement applied to all 403(b) plans in 2009.

Q: I have a plan document.  Why do I have to “restate” it?
A: The document you have now is a “best effort” document but does not have IRS approval.  It took the IRS from 2010 until March of 2017 to establish the requirements for approved documents. These Pre-Approved documents will be available this summer.
Q: What is the deadline for getting this done? 
A: March 31, 2020, however, there are thousands of these plans and your provider will likely start the work early in order to timely restate your plan.
Q: What if we don’t restate our plan?  
A: The restatement process not only results in a plan document with the IRS seal of approval but also provides some opportunities to fix errors before they become more serious or are discovered during an IRS or DOL audit.  We can expect additional audit activity after 2020 and plans without IRS Pre-Approval are likely to be primary targets.
Q: Is there any benefit to this process other than the IRS Pre-Approval? 
A: It is an excellent time to review the plan.  Does it work the way you want it to?  Is the plan being operated in a manner consistent with its terms?  
Q: How do I select a consultant to do this work?
A: Look for an independent firm with experience with 403(b) plans.  Ask questions about how they will make this process work well for you and your employees.
Q: What about the investments?
A: A great deal of regulatory activity has taken place in the last few years concerning investments appropriate for these plans.  Look for a financial advisor or an advisor team with proper licensing and experience with 403(b) plans.
Q: The insurance company will give me a low cost document and some investments they chose.  Isn’t that sufficient?   
A: The product provider will provide a document that contains provisions favorable to them (annuities in an insurance contract, for example) not necessarily the best ones for your employees or your organization.  Investment support should come from independent financial advisors who put the welfare of your employees first and who understand that all organizations are not the same.

If you can't find your answer, then ask us! Call our 403(b) Specialist Patrcia Neal Jensen at 818.594.4900