June 28, 2013 (PLANSPONSOR.com) – Some retirement plan compliance issues are unique to 403(b)s.
After years of waiting, 403(b) plan sponsors were finally provided with correction procedures for errors when the Internal Revenue Service (IRS) released an updated Employee Plans Compliance Resolution System (EPCRS) in January (see "A New Compliance Environment for 403(b)s"). Susan Diehl, QPA, with PenServe Plan Services in Horsham, Pennsylvania, told attendees of the 2013 National Tax-Sheltered Accounts Association (NTSAA) 403(b) Summit that many of the corrections are similar to the corrections for 401(k) plans, but since 403(b)s have some unique allowable features, such as catch-up contributions for employees with 15 years of service, corrections were added solely for them.
One thing the new EPCRS requires, since 403(b)s often have multiple service providers (vendors), is that plan sponsors must attempt to get signed certifications from all vendors that they will help with corrections, according to Diehl.
The IRS also recently announced a pre-approved plan document program for 403(b)s (see "What to Know About the 403(b) Pre-Approved Plan Program"). Richard Turner, deputy general counsel at VALIC in Houston, Texas, pointed out that the agency announced it is not offering a plan determination letter program, so if plan sponsors want an IRS-approved plan document, it must fit into a prototype or volume submitter plan offered in the program. Turner added that, under the program, church plans can now have a pre-approved plan document.