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Posted by Diane Caron on Fri, Mar 11, 2016 @ 11:34 AM

Retirement savings

Compliance with retirement plan requirements is a moving target. As changes in the law occur, retirement plans are required to comply in operation with the new provisions as of the effective date of the law. Along with these changes, the IRS announces periods during which the plan must adopt interim amendments so that the plan’s language conforms to the plan operation. Retirement plan documents must then be restated in their entirety at set intervals (every five to six years), incorporating the required interim amendments.

This restatement process has been ongoing for other qualified retirement plans (401(k), profit sharing, defined benefit) for quite some time, but 403(b) plans are relatively new to this process. Prior to 2009, 403(b) plans were not required to have a written plan document. This changed with passage of the final 403(b) regulations, which required plans to have the written plan document in place by December 31, 2009. Although this was an important step in the evolution of 403(b) compliance, there are still changes to come.

The time is fast approaching when all 403(b) plans will need to be restated. Under the required restatement process, there is a window of time where document providers (including financial institutions, employee benefit consultants, attorneys, and CPAs) must prepare and submit their plan documents to the IRS for approval of the plan document language. These IRS approved documents are known as “pre-approved” documents. Once approved by the IRS, the document provider makes their pre-approved plans available to their clients. By adopting a pre-approved document, the employer has assurance that the plan language is acceptable and that it complies with the tax code requirements.

Once the documents are approved, plan sponsors have a two-year window in which to adopt the newly approved plan documents. The documents for this required restatement for 403(b) plans were submitted to the IRS by April 30, 2015. It generally takes two years for the IRS to approve the plan documents, so approval is expected in early 2017. The restatement window for 403(b) plan sponsors is expected to be 2017 through 2019.

Next Steps

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.

Use Your Resources

Going forward, 403(b) plan sponsors who use a pre-approved plan document should expect to restate their plan documents every six years. Plans that are on an individually designed plan document (a document that is not pre-approved by the IRS) should expect to restate their plan every five years. It is highly recommended that a pre-approved plan be used as there is currently no IRS approval process in place for individually designed 403(b) plans.

To minimize your compliance risk, be sure you have a service provider in place that will be preparing the document restatement for you and alerting you to the restatement deadlines. An independent consultant may be able to assist in the restatement process by providing an objective review of your current document and coordinating the restatement process.

If you have any questions on the restatement process, please contact us here.


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






Tags: 403(b), 403(b) Plan Document Restatement

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