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IRS Extends 403(b) Written Plan Deadline to December 31, 2009


December 15, 2008

When the Internal Revenue Service issued its final regulations for Section 403(b), it set forth a January 1, 2009 deadline for plan sponsors to adopt a written 403(b) plan. For the past several months, school districts and tax-exempt organizations have requested that the IRS extend the deadline for the 403(b) written plan requirement. On December 11, the IRS granted an extension to the written plan requirement of the final regulations. Accordingly, 403(b) plan sponsors now have until December 31, 2009 to adopt a written plan that complies with the requirements of the final regulations.

The IRS's extension, published in Notice 2009-3, is welcome relief for school districts that have not yet adopted a written plan. However, while the rules concerning the 403(b) plan need not be set forth in a formally compliant written document until December 31, 2009, good faith operational compliance with the final regulations is still required during 2009. Therefore, plan sponsors are still required to operate their 403(b) plans based on a "reasonable interpretation" of Section 403(b), taking into account the final regulations. Further, plan sponsors will be expected to correct any operational deficiencies that occurred during 2009 prior to the December 31, 2009 extended deadline.

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