IRS Releases Model Provisions for 403(b) Plans

11/28/07

Yesterday, the Treasury Department and Internal Revenue Service issued Revenue Procedure 2007-71, which provides model written plan language for 403(b) plans.  Revenue Procedure 2007-71 also provides additional guidance concerning the final 403(b) regulations that were released in July. 

 

Under the final 403(b) regulations, all 403(b) arrangements must be maintained pursuant to a "written plan."  The general effective date for this requirement is January 1, 2009.  Revenue Procedure 2007-71 is intended to provide model written plan language that can be relied on by employers that sponsor 403(b) plans.  School districts which adopt the model written plan language, either on a word-for-word basis or using language that is substantially similar in all material respects, will have the IRS's "blessing" that the language satisfies Section 403(b). 

 

While the model plan language is fairly comprehensive, there are additional provisions which will likely be necessary, and the model written plan language is not necessarily "one-size-fits-all."  In addition, consideration should be given as to whether there are any collective bargaining implications for the plan's terms.  Franczek Sullivan P.C. is in the process of developing a model written plan, with additional optional provisions that comply with Section 403(b), which is based on the model language provided in Revenue Procedure 2007-71.  We will be working with school districts on an individual basis to create written plans, with the goal of securing board of education approval of a written plan prior to the beginning of the 2008-2009 school year.