403(b) Pre-Approved Plans

 

If you are an eligible employer, you can satisfy the 403(b) written plan requirement by adopting a 403(b) pre-approved plan instead of an individually designed plan. All 403(b) plans (except church plans that don't contain any retirement income accounts) must satisfy the written plan requirement. An employer that adopts a 403(b) pre-approved plan generally has assurance that its plan document complies with IRC Section 403(b).

If you adopt a 403(b) pre-approved plan, it's important that you operate the plan according to its written terms to maintain its tax-qualified status.

You can adopt a 403(b) pre-approved plan after the pre-approved sponsor receives a favorable:

  • opinion letter for a word-for-word identical adopter or minor modifier of a 403(b) prototype plan, or
     
  • advisory letter for a word-for-word identical adopter or minor modifier of a 403(b) volume submitter plan.

To be a word-for-word identical adopter, the entity must sponsor a plan that is identical, on a word-for-word basis, to either a basic plan document or a specimen plan of a mass submitter.

To be a minor modifier, the entity must sponsor a plan that contains only minor changes from a basic plan document of a mass submitter, and the changes do not require the IRS to do an in-depth technical review to issue an opinion letter to the plan.

For more information, see each section below:

Why you may want to adopt a 403(b) pre-approved plan

Cost

Typically, the cost for a pre-approved plan is less than for an individually designed plan.

Reliance

You generally have peace of mind that the form of the pre-approved plan meets the legal requirements. However, you should review the favorable opinion or advisory letter for complete details on the scope of the plan's letter.

In addition to having all legally required provisions, a pre-approved plan may offer optional plan provisions that you can choose, usually by selecting them in the adoption agreement.

Exceptions - You can't rely on a 403(b) pre-approved plan's favorable opinion or advisory letter for whether the plan's:

  • investment agreements meet all legal requirements even if these are incorporated into the plan by reference. These investment agreements include:
     
    • annuity contracts,
    • custodial accounts, or
    • other ancillary documents.
       
  • form meets all legal requirements if you cause it to become an individually designed plan by changing the 403(b) pre-approved plan document. Please note that the IRS does not intend to establish a determination letter program for individually designed 403(b) plans at this time.
     
  • You also can't rely on a 403(b) pre-approved plan's favorable opinion or advisory letter for whether the plan is subject to, or satisfies, the requirements of ERISA.

Updates

Law changes may require you to amend your 403(b) plan by certain deadlines so your plan may continue meeting tax qualification requirements. If an update is necessary, the pre-approved plan sponsor must amend the plan and notify you of the amendment, or updated plan document, and your required signature, if applicable.

Support services

Your 403(b) pre-approved plan sponsor may offer you additional support with plan administration. Make sure you carefully review and select any offered service agreement options.

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Frequently asked questions

Drafting resources

Key provisions of the 403(b) pre-approved plan program

  • Revenue Procedure 2013-22 — Contains details of the 403(b) pre-approved plan program and the procedures to apply for an opinion or advisory letter and extends remedial amendment period for sponsors who adopt a pre-approved 403(b) plan with a favorable opinion letter.
     
  • Revenue Procedure 2019-39 — Remedial amendment period to correct form defects in a 403(b) plan, retroactive to January 1, 2010, if the plan sponsor adopts a pre-approved 403(b) plan with a favorable opinion letter or applies for an individual determination letter when available ends on March 31, 2020 and provides a limited extension of the Initial Remedial Amendment Period for certain Form Defects.
     
  • Revenue Procedure 2017-18 (Pre-approved 403(b) plans) — The last day of the remedial amendment period for Section 403(b) plans, for purposes of section 21 of Rev. Proc. 2013-22, 2013-18 I.R.B. 985, is March 31, 2020.

An employer that adopts a 403(b) pre-approved plan generally has assurance that its plan document complies with IRC Section 403(b). Please note that the IRS doesn't intend to establish a determination letter program for individually designed 403(b) plans at this time.

Mandatory plan provisions

Revenue Procedure 2013-22 lists mandatory provisions for all 403(b) pre-approved plans, and additional required provisions for 403(b) prototype plans and for 403(b)(9) plans.

To draft 403(b) pre-approved plans, sponsors can use:

403(b) pre-approved plan sponsor's duties

Generally, a pre-approved plan sponsor must:

  • keep a written record of the eligible employers who adopted its plan and if requested by IRS, provide their names, addresses and EINs (this requirement doesn't apply to a church-related organization sponsoring a pre-approved plan 403(b)(9) retirement income account); and
     
  • keep the plan approved by:
     
    1. amending the plan for law changes,
    2. applying for a new opinion or advisory letter when required,
    3. informing about and providing each adopting employer all restated plans, amendments, and opinion or advisory letters, and
    4. complying with all required notice procedures.

Scope of an opinion or advisory letter

IRS will issue a favorable opinion or advisory letter to a pre-approved 403(b) plan if the submitted plan meets the requirements of IRC Section 403(b). A favorable opinion or advisory letter won't cover whether the plan is subject to, or satisfies, any ERISA requirements, any investment arrangement terms or other documents incorporated by reference.

Application procedures

See Apply for an Opinion or Advisory Letter - Pre-Approved 403(b) Plans.

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List of 403(b) pre-approved plans

This list includes Prototype (P) and Volume Submitter (VS) plans that were submitted to the IRS for opinion or advisory letters from June 28, 2013 to November 15, 2017, covering the final regulations under IRC 403(b) which were issued in 2007 (2007 final regulations).

The list may be updated periodically. It includes:

  1. The name of the P sponsor or VS practitioner
  2. The file folder number (FFN) assigned to each plan
  3. The plan type of each plan submitted
  4. A letter serial number (LSN) and date. Please note that virtually all of the opinion and advisory letters were issued at the same time, March 31, 2017.

Determining the type of plan

The third digit of the FFN indicates the type of plan being approved.  For example, a number 2 or 3 respectively denote a standardized or non-standardized P; a 5 or 6 depicts a volume submitter plan.

Remedial amendment period

Section 21 of Revenue Procedure 2013-22 establishes a remedial amendment period under which an eligible employer can retroactively correct form defects in its written 403(b) plan in order to satisfy the written plan document requirement of the 2007 final regulations.  An eligible employer who adopts on or before the end of this remedial amendment period a P or VS plan with an opinion or advisory letter (i.e., an approved P or VS plan) retroactive to the first day of such remedial amendment period will automatically be considered to have corrected any form defects (except to the extent any document incorporated by reference into the plan must be amended).

The selection of the last day of the remedial amendment period for Section 403(b) plans was reserved in Section 21 of Rev. Proc. 2013-22 (setting forth the procedures for issuing opinion and advisory letters for Section 403(b) pre-approved plans). The last day of the remedial amendment period by which an eligible employer must adopt an approved P or VS plan, or otherwise amend its plan in the case of an individually designed plan, is addressed in Revenue Procedure 2017-18. This revenue procedure provides that the last day of the remedial amendment period for Section 403(b) plans, for purposes of section 21 of Rev. Proc. 2013-22, 2013 18 I.R.B. 985, is March 31, 2020.

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Additional Resources