“Our company did timely adopt a written 403(b) plan, but we recently discovered it has not been amended since that time. Should we use the VCP program to address these errors as well?”
Michael A. Webb, vice president, Retirement Practice, Cammack Retirement Group, answers:
Thanks for reading Ask the Experts, and for posing your question. Unfortunately, the voluntary correction program (VCP) may only be used for the specific 403(b) plan document failure of failing to adopt a written 403(b) plan in a timely fashion (see “(b)lines Ask the Experts – Correction for Failure to Adopt a Plan Document”), and NOT for other plan document failures, such as the one you describe.
The Experts responded to a similar question regarding a failure to amend a 403(b) plan, in 2012. Back then, we stated that benefits counsel with specific expertise in 403(b) plan issues be consulted to determine the best course of action, but, given the Internal Revenue Service (IRS) guidance thus far, a possibility might be that the plan be simply updated for all missed amendments at present, because the IRS has not yet issued remedial amendment period guidance for 403(b) plans and may not do so until much later into the initial 403(b) preapproved program process.
That response remains valid today and is not directly affected by the changes to the VCP program regarding plan document failures (i.e., the statement in the 2012 column indicating that 403(b) nonamender failures are ineligible for correction under the Employee Plans Compliance Resolution System has not changed).
The only substantive change from our 2012 Q&A is that the IRS has since stated it has no intention to offer a determination letter program for 403(b) plans. Thus, it is currently unclear whether future IRS guidance about vendor prototype/volume submitter documents regarding remedial amendments for 403(b) plans will apply to individually designed 403(b) plans.
The Experts thank you once again for your question!
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.