As a tool to aid 403(b) plan sponsors in keeping in compliance with IRS regulations, the agency provides on its Web site a 403(b) Plan Checklist. The document also explains important rules of which sponsors need to be aware.
The Checklist includes 10 questions sponsors should ask themselves when reviewing their plans:
- Does your organization qualify as a public educational institution or as a charitable organization exempt from tax under Internal Revenue Code 501(c)(3)?
- Are ALL employees who normally work 20 hours or more per week (universal availability rule) given the opportunity to make a salary deferral?
- Are elective deferrals, including any designated Roth contributions, limited to the amounts under IRC 402(g) in a calendar year?
- Are the total employer and employee contributions limited so as not to exceed the IRC 415(c) limits?
- If the IRC 402(g) “15 years of service catch-up” contributions are being made, does the employee have the required 15 years of service with the same employer?
- If your program permits age 50+ catch-up contributions, were each of your employees age 50 and over informed of their rights to make these deferrals?
- Does the 403(b) annuity contract or custodial account contain the nontransferability provisions (annuity contracts only); state the limits under IRC 402(g); and contain the direct rollover provisions of IRC 401(a)(31)?
- If your plan offers a 5-year post severance provision, are amounts contributed through a non-elective method?
- Are you (as the employer) and your vendor enforcing participant loan repayments and limiting aggregate loan amounts as required under IRC 72(p)?
- Are you and your vendors requiring documentation that hardship distributions meet the definitions and requirements for hardship found in the IRC 401(k) regulations?
The complete document is at http://www.irs.gov/pub/irs-tege/pub4546.pdf.
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