It’s crunch time for 403(b) plans

Much has been said and written about the new 403(b) regulations effective January 1, 2009, but most 403(b) plans haven’t even started to get ready for compliance. And so it’s crunch time for 403(b) plans.

Crunch time is nothing new for 401(k) plans who have been dealing with compliance deadlines since the passage of the Employee Retirement Income Security Act of 1974 (ERISA). But it’s a first time challenge for 403(b) plans. The IRS has constructed this challenge by providing comprehensive guidance for 403(b) plans for the first time in over 40 years. 403(b) plans will now have to deal with such issues as:

  • 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

So between now and year-end, I’m going to be posting a series of articles on how to get ready for the January 1, 2009 deadline. We’re calling them the 403(b) Crunch Time Series. I’ll be joined by Bob Toth as a guest blogger. Bob, a Partner in the Baker & Daniels law firm, has over 25 years experience advising 403(b) plans and service providers.

And since it all starts with a new plan document, Bob will kick off the series tomorrow with his guest post, Avoiding Problems with 403(b) Custodial Accounts.