Compliance October 3, 2008

IRS Developing Pre-approved Plan Program for 403(b)s

October 3, 2008 (PLANSPONSOR.com) - The Internal Revenue Service (IRS) said it is developing plan approval programs for 403(b) plans similar to the current programs offered for 401(a) tax-qualified plans.
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The programs include a pre-approved plan program and a determination letter program for individually drafted plans. New IRS regulations effective January 1, 2009, require all 403(b) programs to have in place a formal, written plan document.

The Service expects the pre-approved 403(b) plan program to open in spring 2009, and the individually designed plan program to open in early 2011.

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In addition, the IRS said it anticipates posting a draft 403(b) Listing of Required Modifications (LRM) in order for plans to qualify for approval on its Web site in early fall, and will request public comment.

The Service said it will issue a revenue procedure by the end of the calendar year that will open the pre-approved 403(b) plan program for submissions from prototype sponsors.

The announcement was in the Fall, 2008 Edition of Employee Plans News .

Administration October 2, 2008

FASB Provides Guidance on Valuing Assets in an 'Inactive Market'

October 2, 2008 (PLANSPONSOR.com) - Accounting rules standards maker Financial Accounting Standards Board (FASB) has issued a staff guidance document on how to assign fair values to the troubled assets at the heart of the nation's financial crisis.
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According to a BNA report, the planned FASB staff position on how to value assets in an inactive market, will get a final board vote October 10, in time for companies’ third-quarter reporting. Robert Herz, chairman of the accounting board, stressed that work on the guidance was being done quickly in recognition of “these rather unprecedented times.”

The board plans to include in its planned FASB staff position (FSP FAS 157-d) an illustration of how the marketplace-based principles of Statement No. 157, Fair Value Measurements, would be applied in an inactive market. In addition, FASB’s technical director said staff accountants are discussing a possible short-term project on disclosures about financial assets in an inactive market.

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Board member Leslie Seidman suggested the guidance would make the September 30 joint statement of the staffs of the board and of the SEC’s Office of Chief Accountant “clearer and more fulsome” by using an illustration (See  FASB, SEC Pondering Clarity for FAS 157 ).

Herz also noted that the board has received outside input from those who “have taken the view that having to record things at fair value in these times is unwarranted and exacerbates some of the problems in the markets.”

One board member, Lawrence Smith, delved more into the details of FASB No. 157 at the FASB meeting and its fair value “hierarchy.” That three-level order signifies the quality of market-oriented information, or “inputs,” that is factored into fair valuation.

More information is available  here .

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