403(b) plans: “Don’t You (Forget About Me)”

For today’s visual metaphor, I could have used artwork for Simple Minds’ 1984 hit, Don’t You (Forget About Me), from the soundtrack of Breakfast Club, the movie by the recently deceased John Hughes. Instead, I’m using a picture that caught my attention photographed by artist Jeannette Sheehy inspired by the song.

In the context of the movie, the song title recalls the theme of the movie, five teenagers who they spend a Saturday in detention together and realize that they are all different than their respective stereotypes.

In a retirement plan context, the song title reminds many 403(b) plan sponsors that there is work that has to be done before year end. And the work is being in compliance with the IRS final 403(b) Regulations.

I wrote about the new Regulations in late 2008 in our 403(b) Crunch Time Series with guest author, attorney Bob Toth, himself a blogger on Giller & Calhoun’sBusiness of Benefits blog.

The Regulations originally had a January 1, 2009 effective date and dealt with the following aspects of 403(b) plans:

  • Requirement for a plan document
  • Rigorous application of the non-discrimination rules
  • Employer responsibility for complying with contribution limits
  • Timing of contributions
  • Transfers to other 403(b) contracts
  • Employer responsibility for coordinating and tracking loans
  • Plan termination

In late 2008, the IRS extended the plan document requirement to December 31, 2009. But that’s not the only “Don’t You Forget About Me” aspect of 403(b) plans. Two others include:

  • During 2009, the plan sponsor must operate the plan in accordance with a reasonable interpretation of Section 403(b), taking into account the final regulations.
  • Before the end of 2009, the plan sponsor must make its best efforts to retroactively correct any operational failure during the 2009 calendar year to conform to the terms of the written Section 403(b) plan, with such correction to be based on the general principles of correction set forth in the IRS’ Employee Plans Compliance Resolution System (EPCRS).

It’s only early October, and there is still time for 403(b) plan sponsors to do a compliance review to determine the extent to which they are in compliance with the 403(b) Regulations, and to develop an action plan to resolve an issues.

In the meantime, let’s lighten things up and roll the video, Simple Minds performing Don’t You (Forget About Me) in Philadelphia at Live Aid, July 13th 1985.