Public schools get an extension on 403 (b) written plans

In December, the Internal Revenue Service (IRS) issued new guidance  providing additional time for public schools to put written plans in place to comply with regulations governing 403(b) retirement plans. Schools were initially supposed to have written plans in place by Jan. 1, 2009. The IRS extended the deadline for plan sponsors when plan administrators expressed concern about the difficulty of meeting the deadline.

The IRS will treat school district 403(b) plans as meeting the regulations during 2009 under the following circumstances:

• School districts adopt a written 403(b) plan that is intended to satisfy requirements and regulations by Dec. 31, 2009.
• Throughout the year, the school district must operate the plan in accordance with a reasonable interpretation of 403(b) and its related regulations.
• By the end of the year, the school district makes its best effort to retroactively correct any operational failure during the year and conform to the written plan.

The IRS intends to issue more 403(b) guidance, including:

• a new procedure for 403(b) plans to obtain approval of the plan document
• a way of allowing remedial amendments to retroactively fix plan provisions