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Posted by Diane Caron on Wed, Feb 22, 2017 @ 08:00 AM

403(b) Plans

The IRS recently provided guidance related to the restatement of 403(b) plans. It is anticipated that the IRS will be issuing approval letters to document providers for all 403(b) plans in early spring 2017. Once issued, all employers will be required to restate their 403(b) plans using pre-approved language.

In Rev. Proc. 2017-18, the IRS set Mar. 31, 2020, as the deadline for restating all 403(b) plans. The end of the restatement period (referred to as the remedial amendment period) is the date by which all 403(b) plans must be restated to remain in compliance with the 403(b) regulations. The restatement is retroactive to Jan. 1, 2010.

Although your plan document provider will coordinate the majority of the legwork, the restatement period provides an opportunity to review your plan’s provisions and address any issues with plan administration.

Why 403(b) Plans Must Be Restated

All 403(b) plans were required to be written in 2009. At the same time, the IRS stated that it would release suggested language at a later date, which would then require all 403(b) plans to be restated in order to remain in compliance with the law.

The IRS has since issued suggested plan language, and document providers (employee benefit consultants, CPAs, attorneys, financial institutions, and other providers) have submitted their prototype plan documents to the IRS and are awaiting approval.

Once the IRS issues the approval letters to document providers, employers will have until Mar. 31, 2020, to restate their plans.

Adoption of the approved 403(b) plan document will provide assurance that the document language complies with the law. However, it is important to evaluate the day-to-day processes and procedures to be certain that the plan is operating in compliance with the terms of the plan document.

The following can be done to prepare for the restatement process:

  • Review your plan processes and procedures and compare them to the plan document to ensure that the plan is being operated in compliance with the plan document.
  • Identify any discrepancies and whether the procedures should be changed to comply with the plan document or the plan document should be revised to comply with the plan’s operation.
  • Evaluate the plan’s provisions and decide if changes should be made. Is the plan working well? Are the employer contributions at a desirable level? Is there a high level of employee participation?
  • Review your plan’s definition of compensation. Are contributions being allocated on the definition as outlined in your plan document?
  • Review your plan’s compliance testing. Are the correct tests being performed? Does the plan have trouble passing the tests?
  • Consider obtaining an independent review of the plan document, procedures, and compliance. Audit activity by the IRS and Department of Labor has increased for 403(b) plans.
  • Review language on contribution groups or tiers to be sure it is clear and does not leave the groups open to interpretation. For example, if rates of contribution are based on years of service, what is the definition of years of service for this purpose? At what date does the change in grouping take effect?
  • Discuss desired changes and any issues with your document provider.
  • Watch for alerts from your service provider that the restatement period has begun. Be sure to take action promptly as directed.

An independent consultant may be able to help review your plan documents and help your organization identify where plan documents could be improved. For any questions on the restatement process, please contact us here.

Related Resources


Diane Caron

Diane Caron is a Director in the Retirement Plan Services Group at CBIZ Tofias. She can be reached at 617.761.0539 or  




Copyright © 2017 CBIZ Tofias & MHM (Mayer Hoffman McCann P.C.). All rights reserved. CBIZ Tofias and MHM are separate and independent legal entities that work together to serve clients. CBIZ Tofias is a leading provider of tax and consulting services. MHM is an independent CPA firm providing audit and other attest services. This article is protected by U.S. and international copyright laws and treaties. Use of the material contained herein without the express written consent of the firms is prohibited by law. Material contained in this alert is informational and promotional in nature and not intended to be specific financial, tax or consulting advice. Readers are advised to seek professional consultation regarding circumstances affecting their business.

Tags: not-for-profit, IRS, 403(b), NFP, nonprofit, 403(b) Plan Document Restatement

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