The Internal Revenue Service has issued guidance that could help administrators of school Section 403(b) tax-sheltered annuity plans comply with new federal regulations.
The guidance, given in IRS Revenue Procedure 2007-71, provides model plan language for school 403(b) plans that are exempt from Employee Retirement Income Security Act and, until now, have not had to operate under a written plan.
New federal regulations will require all 403(b) plans, including those that are exempt from ERISA, to have written plans, IRS officials write in the revenue procedure.
The IRS has developed model language to address concerns that some public schools might have trouble paying to meet the written plan requirements, officials say.
Sponsors of 403(b) plans, other than public schools, can use the model, but adopting the plan language in the revenue procedure would not have the same status as getting a private letter ruling, officials say.
If a non-school 403(b) plan sponsor already has an IRS private letter ruling, it can use the language in the new revenue procedure without losing reliance on the private letter ruling, officials say.
The revenue procedure, including the model plan language, is available