The Internal Revenue Service is moving ahead with efforts to start a program that would pre-approve prototype Section 403(b) retirement plans.
The program could simplify the process that public schools and other nonprofit employers and their retirement services vendors go through when setting up 403(b) plans.
The program would serve “employee benefits practitioners and financial organizations, such as mutual funds and insurance companies” that expect plans based on the prototype plan to be adopted by at least 30 employers, IRS officials write in IRS Announcement 2009-34, which includes a draft revenue procedure for the program and calls for public comments on the proposal.
Employers that adopted the pre-approved prototype plans would “generally have assurance that the form of the plan meets the requirements under Section 403(b) and the [related] 2007 regulations,” officials write in the announcement.
The 403(b) prototype plan program would be similar to the existing 401(k) prototype program, which is shaped by an IRS revenue procedure released in 2005, officials write.
In July 2007, officials note, the IRS issued final regulations that require 403(b) plan sponsors to maintain written plans. The IRS followed up that year by publishing suggested model plan language.
Until the IRS issues further notice, schools and other eligible employers can use the model language released in 2007, officials write.