Here are a few follow-up question from the EBN/Bloomberg BNA webinar titled Behind the Scenes of IRS Employee Plans Enforcement Strategies. To view the archived program, click here.
A: The Employee Plans function does not have a current enforcement strategy in place for issues surrounding those plan types.
Q: Any specific information specific to school district type government plans 403 (b) plans, TSA's?
A: As 403(b) plans constitute a part of our Employee Plans scope, we do have an ongoing 403(b) focus in our guidance, voluntary compliance and examination functions. School district plans are a major market segment in that focus. Along with an active presence in the 403(b) arena, we have made a wealth of information, including a quite robust fix-it guide, available at http://www.irs.gov/403b. The 403(b)-related material on this site will hopefully address your questions or concerns.
Q: Can [you] speak to Hardship distributions - how often [are they] audited and [what] documentation [is] required?
A: While we do consider distributions in the scope of many examinations, we have not specifically focused on hardship distributions, per se. Agents will generally request the documentation that the plan sponsor or administrator considered in approving hardship distributions in order to ensure plan terms were followed.
Q: Do the new 403(b) corrections under EPCRS apply to the failure to adopt interim amendments (i.e., not just to the failure to have a written plan document altogether)?
403(b) retirement plans are not 401(a) plans and are not subject to Rev. Proc. 2007-44. Eligible employers who sponsor 403(b) plans are not permitted to submit determination letter applications to the IRS under Cycles A, B, C, etc. and are not required to adopt interim amendments in order to be eligible for some extended remedial amendment cycle. A 403(b) plan document can be amended to comply with changes in the law pursuant to its own remedial amendment period.
Under section 2.03 of Revenue Procedure 2013-12, EPCRS is available to correct failures that occur in years prior to 2009 in violation of § 403(b) with respect to a plan’s operation other than a failure to operate in accordance with the plan document. The pre-2009 failures that can be currently corrected under EPCRS can found in Rev. Proc. 2008-50, section 5.02. See also Rev. Proc. 2013-12 section 16. There is no document requirement applicable to 403(b) Plans prior to 2009. Announcement 2009-34, and Announcement 2009-89, provide guidance on written 403(b) Plans, including a retroactive remedial amendment period for years after 2009 that will permit employers to retroactively amend their plans for 403(b) Plan Document Failures. To the extent that a remedial amendment period applies under Announcement 2009-89, a 403(b) plan will not have a Plan Document Failure during the period beginning January 1, 2010, and ending on a date to be announced in future guidance, provided that the Plan Document Failure is corrected through a retroactive plan amendment that is adopted by the end of the remedial amendment period. This special remedial amendment period for 403(b) plans only applies if a written 403(b) plan was adopted by an eligible plan sponsor by December 31, 2009, and who had taken timely action to comply with all of the other conditions specified in Notice 2009-3.
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