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The plan approval program extends to Sec. 403(b) retirement plans

The IRS and Treasury will let churches, public schools and charities that have Sec. 403(b) pension plans benefit from part of the same individually designed pension plan determination letter program used by qualified pension plans, starting in June 2023.

Rev. proc. 2022-40 details this and other changes affecting individually designed pension plans. One change is that, effective June 1, 2023, Sec. Sponsors of 403(b) retirement plans can submit Letter of Determination requests for all individually designed initial retirement plans based on the sponsors’ Employer Identification Numbers (EINs).

Also effective June 1, 2023, Sec. Sponsors of 403(b) retirement plans may also request a letter of determination when terminating the plan on a Form 5310, Request for termination decision To planor at any time thereafter regardless of their EIN.

Changes to the procedures for submitting and processing individually designed pension plans include:

  • The IRS will generally consider this in its exam qualification requirements and Sec. 403(b) requirements that are in effect or that have been included in a list of required changes, no later than the last day of the second calendar year preceding the year in which the determination letter request is submitted, subject to any changes specified on the Employee Plans Annual Earnings Procedure which provides the administrative and procedural rules for submitting Letter of Determination requests, currently Rev. proc. 2022-4.

These rules will apply to submissions for all individually designed retirement plans.

The IRS says Reverend Proc. 2023-4, which is in development, will contain additional changes to procedural requirements for plan submissions, such as the phased introduction of mandatory electronic submission of Letter of Determination requests. Forms 5300 and 5310 will also be updated to reflect these changes. The revenue procedure will be released “in the near future,” the IRS said.

— To comment on this article or suggest an idea for another article, contact Martha Wagoner at [email protected].



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