403(b) Remedial Amendment Period – Long Awaited IRS Guidance is Here!
March 31, 2020 will be the last day of the initial remedial amendment period (RAP) for 403(b) plans. The remedial amendment period is the time allowed for employers to correct operational functions or language errors in their plan(s).
A look back – and what was missing:
You may recall, in 2007 the IRS put out regulations requiring 403(b) plans to have a written plan document. Gaining a tax-favored status is tied to having this written plan document. However, there was no guidance on the acceptable language or terms of these written plan documents. Also absent was the way to get a favorable IRS determination letter on a plan’s tax-favored status.
The RAP gives relief to employers concerned about plan errors. The RAP allows an employer to correct the errors in a 403(b) plan document or any documents incorporated into it. Corrections can be retroactive back to January 1, 2010 or the effective date of the plan, whichever is later. The new RAP is found in Rev. Proc. 2017-18.
So, what do you do? Your options are:
Nyhart expects IRS advisory letters will begin to be published sometime in the second quarter. At this point, Nyhart will start preparing plan documents (second half of 2017). If you have questions or are interested in moving your plan to the pre-approved format, please contact us and a Nyhart 403(b) plan expert will be happy to assist you. We look forward to hearing from you!
This article was last updated on February 10, 2017