David Powell, Groom Law Group, answers:
First, double-check that there are not sufficient documents in writing to constitute a written plan. The regulations provide that the plan must be in writing and must include various items, as set out in Treas. Reg. § 1.403(b)-3(b)(3), but the plan apparently does not have to be in a single document or be in a typical 401(a)-like format. Some mixture of contracts, custodial accounts and other writings might conceivably suffice.
Also, keep in mind that there are various different potential effective dates in the case of collectively bargained plans and certain church plans. Some plans of churches and qualified church-controlled organizations (QCCOs) do not have to be in writing. See, Treas. Reg. § 1.403(b)-3(iii). In addition, church plans have a special remedial amendment period rule under Section 251(d) of TEFRA.
However, at this point, barring the application of one of those, the plan is presumably not in compliance with the final regulations and the transition relief under IRS Notice 2009-3. It may be possible to correct for the plan document failure under the Employee Plans Compliance Resolution System (EPCRS), set forth in Rev. Proc. 2008-50, but be aware that the IRS has indicated in Notice 2009-3 that they plan to update EPCRS for 403(b) failures, which may well include the failure to have a written plan by the applicable effective date.
The plan sponsor should seek its own tax and legal advice as to how to proceed.
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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