(b)lines Ask the Experts – Amending Retirement Plans for Final Disability Regulations

“I administer an Employee Retirement Income Security Act (ERISA) 403(b) retirement plan, and our plan provides for early retirement distributions in the event of disability. I was just informed that final disability regulations took effect April 1st, but I know that we did not amend our plan to reflect these new regulations. Should I panic?”

Stacey Bradford, David Levine and David Powell, with Groom Law Group, and Michael A. Webb, vice president, Retirement Plan Services, Cammack Retirement Group, answer:


You should probably not panic, as an amendment is not required for most retirement plans, but you should confirm with appropriate counsel that no amendment was necessary.


There were indeed final regulations that were issued by the Department of Labor (DOL) regarding claims procedures for plans providing disability benefits, and such regulations did become effective on April 1st. However, the good news for you and other retirement plan sponsors is that the final regulations only impact retirement plans where a plan fiduciary has the discretion to determine whether or not a participant is disabled. In the Experts’ experience, most retirement plan disability definitions rely strictly on a disability determination by an outside party, such as the Social Security Administration, NOT a plan fiduciary.


Thus, if your plan’s definition of disability is like most, a plan amendment would not have been required by the April 1st deadline, though, again, you should check with counsel with specific expertise in this area to make certain that no deadline was missed. And, even if it turns out that an amendment is required, the Experts again suggest that you do not panic, as there is a special remedial amendment period for 403(b) plans that may provide some flexibility to amend the plan.



NOTE: This feature is to provide general information only, does not constitute legal advice, and cannot be used or substituted for legal or tax advice.


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