Recently, the IRS released new 403(b) guidance which updates the remedial amendment period (“RAP”) rules for 403(b) Plans. RAPs allow employers to correct errors in their 403(b) plan document. In addition, Revenue Procedure 2019-39 provides amendment deadlines, a system of pre-approved 403(b) restatement cycles, and a limited extension to the initial RAP March 31, 2020 deadline.
Individually Designed Plan Deadlines
- The initial RAP deadline of March 31, 2020 was extended to the later of March 31, 2020 or the last day of the second calendar year following the year in which a new plan or an amendment to existing plan was adopted.
- For regulatory changes published in the IRS annual required amendment list (released during the fourth quarter of each year), the deadline to adopt an amendment is the end of the second calendar year following the release of the list (e.g. December 31, 2020 for a change required in 2018).
- For discretionary amendments to non-governmental plans, the adoption deadline is the end of the plan year in which the plan amendment is effective.
Pre-approved Plan Deadlines
- Establishes a recurring RAP cycle for pre-approved 403(b) Plans following March 31, 2020. The IRS anticipates each cycle to last approximately six years, subject to future guidance.
- Discretionary amendments must be adopted by the end of the plan year in which the amendment is effective.
- Discretionary amendments that violate Section 403(b) and were effective prior to January 1, 2018 must be corrected no later than March 31, 2020.
- Interim amendments required by the IRS must be adopted by the end of the calendar year following the calendar year the change was required to be effective.
If you have any questions regarding the recently issued IRS guidance or questions about your 403(b) plan, please contact us, and a Nyhart consultant will be happy to assist you.