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Not-For-Profit Plans: Legislative Updates

A Not-For-Profit plan lets employees save for retirement by reducing current salary on a before-tax basis. It can be used with profit-sharing, money purchase, Defined Benefit, and Nonqualified plans.

We're committed to providing our clients with the expertise they need to understand and comply with the ever-changing industry regulations.

Keeping up with the regulations

Final regulations from the Treasury Department may have an impact on your 403(b) plan. The regulations generally apply to taxable years beginning on or after January 1, 2009. In general, the new rules require 403(b) plan sponsors to:

• Create a written plan document,
• Coordinate age-related and special 403(b) catch-up contributions, and
• Monitor the transfer of retirement funds among plan service providers

The rules were created to bring 403(b) plan regulations more in line with requirements for 401(k) and 457 plans.

Understanding what the new rules mean

• Plan Sponsor's Guide to the New Final 403(b) Regulations (PDF: 208 KB) - white paper.
• Understanding the Final 403(b) Regulations (PDF: 1.1 MB) - get a side by side comparison
• Practical Implications of the 403(b) Regulations (PDF: 97 KB) - understand how these regulations affect plan sponsors and actions they may consider taking.
• 403(b) interactive diagnostic tool - use an interactive tool understand what steps you may need to take to comply with the regulations.

NOTE: This diagnostic tool is intended to be used in conjunction with, not in lieu of, services provided by an employer's trusted legal advisors.

Not-for-profit organizations that sponsor 403(b) plans face increased responsibilities as a result of the 403(b) regulations issued by the Department of the Treasury and Internal Revenue Service in 2007. In general, these regulations are effective for plan years beginning January 1, 2009, and later. 403(b) plans must still be operated in reasonable compliance with the final regulations in 2009, but plan sponsors now have until December 31, 2009, to put a plan in place or amend existing plan documents for the final 403(b) regulations.^[1]

We're ready to help you and your financial professionals become better equipped to navigate this challenging transition. This interactive 403(b) diagnostic tool is designed to help employers consider steps they may need to take to comply with the final 403(b) regulations.

Determining the status of your 403(b) plan

403(b) arrangement models determine the next steps an employer should consider taking to comply with the 403(b) regulations. In general, a 403(b) arrangement should fit within one of three models. Use this tool to:

• Determine the model that fits your 403(b) arrangement
• Learn what actions can be taken to help ensure your retirement plan(s) is in compliance with the 403(b) regulations

Use the tool now.

^[1]

The Internal Revenue Service (IRS) issued a notice Dec. 11, 2008, that delayed the written plan document requirement in the final 403(b) regulations until Dec. 31, 2009. 403(b) plans must still be operated in reasonable compliance with the final regulations in 2009, but plan sponsors now have until Dec. 31, 2009, to put a plan in place or amend existing plan documents for the final 403(b) regulations.