403(b) Pre-Approved Plan Program FAQs - Duties of Plan Sponsors


What are the duties of a 403(b) pre-approved plan sponsor?

403(b) pre-approved plan sponsors must:

  1. Keep a written record of adopting employers and provide the IRS, upon its written request, a list of the employers’ names, addresses and Employer Identification Numbers (unless a church-related organization sponsoring a pre-approved plan intended to be a 403(b)(9) retirement income account).
  2. Maintain its pre-approved plan’s approved status by following all Program rules, including:
    • amending the plan by the required deadlines for changes in the Internal Revenue Code, regulations, revenue rulings or any other IRS published guidance that impacts 403(b) plans,
    • applying for a new opinion or advisory letter when required,
    • providing a copy of the plan, all amendments, and the plan’s current opinion or advisory letter to each adopting employer (this may be done electronically), and
    • complying with all required notice procedures.
  3. Notify all of the plan’s adopting employers of plan amendments and restatements (this may be done electronically).
  4. Notify adopting employers of the need to adopt the plan and any restatements by a required deadline, and that adverse tax consequences could result from a failure to adopt the plan or restatement by a required deadline, or to operate the plan according to the plan amendments.
  5. If the plan sponsor determines that an adopting employer's plan may no longer meet the requirements of IRC Section 403(b) and the employer doesn’t or can’t correct the failure under the IRS correction program, the plan sponsor must notify the adopting employer:
    • that the plan may no longer satisfy IRC Section 403(b),
    • that adverse tax consequences may occur, and
    • that the IRS correction program may be available to correct the problem.

Can a 403(b) pre-approved plan sponsor abandon its plan?

Yes. The sponsor must first inform any adopting eligible employer still using the plan that the:

  • plan is no longer a pre-approved plan,
  • the employer’s plan will become an individually-designed plan (unless the employer adopts another 403(b) pre-approved plan), and
  • employer will not be able to rely on the plan’s advisory or opinion letter if there is any change in the law, regulations, or guidance under IRC Section 403(b).

After notifying all such adopting employers, the plan sponsor must notify the IRS in writing that it intends to abandon the plan.

The sponsor must also notify the IRS if its 403(b) pre-approved plan is no longer being used by any eligible employer, and it no longer intends to offer the plan for adoption.

The notification to the IRS should include the file folder number appearing on the plan’s most recent opinion or advisory letter.

By following these procedures, the sponsor is relieved of the 403(b) pre-approved plan sponsor’s duties.

What must a 403(b) pre-approved plan sponsor do if the IRS revokes the plan’s opinion or advisory letter?

The IRS may revoke an opinion or advisory letter it issued for a 403(b) pre-approved plan that it may have issued in error, or which is not in accord with the IRS’s current views. In general, however, the IRS will not apply the revocation retroactively.

A 403(b) pre-approved plan sponsor whose plan’s opinion or advisory letter is revoked must notify all its adopting employers about the revocation.

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