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Employee Plans Compliance Unit (EPCU) - Current Projects - 403(b) Universal Availability in K-12 Schools Follow-Up

Background

This is a follow-up project involving the previous 403(b) Universal Availability K-12 Project involving a sample of school sponsors that received the EPCU Universal Availability Closing Letter (1564-B). This letter was designed to assist schools in determining whether or not they actually met the nondiscrimination provisions. The purpose of this project is to determine whether the schools upon further scrutiny had a universal availability failure and if so, what actions were taken to correct it.

The universal availability requirement provides that if any employee is given the opportunity to make salary reduction contributions to the plan, then all employees must be given that opportunity, with certain specified exceptions. A violation of the universal availability requirement puts a section 403(b) plan at risk for losing the tax benefits provided to its participants.

This project will involve sending letters to a sample of those schools who previously received the EPCU Universal Availability Closing Letter (1564-B) because their response indicated the school’s section 403(b) plan may not have satisfied the universal availability requirement. We provided those schools with information on a number of corrective actions that they could take in order to preserve the tax-favored status of their section 403(b) plan during a special period of relief. The corrective actions included providing each eligible employee the opportunity to participate in the plan for current and future years and may also have required them to make a contribution to the plan on behalf of each eligible employee for each year the employee was improperly excluded from participating in the plan.


The Project Process

Compliance contact letters are being sent to a sample of schools that received the 1564-B letter. This letter (1562-W) requests information concerning whether the schools satisfied the universal availability requirements and if not, what actions were taken to correct it. This letter also includes informational attachments which explain the new written plan document requirements and the catch-up provisions in further detail.

If You Receive a Letter
Please provide the information requested in the letter by completing the Form 886-A. Your response may be sent to us by FAX, e-mail, or mail, as indicated in the letter. You may also furnish any other documents or clarifying material that you believe will be helpful for us to review. You should make every effort to answer the questions as accurately as possible. If you have questions, please communicate with the person whose contact information is listed in the letter. Failure to provide this information could result in further action or examination of your plan.

Other Resources

Additional information concerning 403(b) plans
Additional information involving the establishment of a 403(b) plan

Page Last Reviewed or Updated: 11-Feb-2014