Effective Date for Plan Restatements During the 403(b) Remedial Amendment Period

“As a 403(b) plan sponsor, we are finalizing our restated plan document prior to the March 31, 2020, remedial amendment period deadline. We noticed that the effective date of the restatement is over 10 years ago! Does a January 1, 2010, effective date make any sense?”

Stacey Bradford, Kimberly Boberg, David Levine and David Powell, with Groom Law Group, and Michael A. Webb, vice president, Retirement Plan Services, Cammack Retirement Group, answer:

Strange as it may sound, indeed it does! The reason for an effective date as early as January 1, 2010, is that the restated 403(b) plan document must reflect all changes in the Code and Regulations (and changes in the plan) dating back to January 1, 2010 (or, if later, the date the plan came into existence). Thus, you have the opportunity to correct any form defects in the plan document that occurred at any time dating back to January 1, 2010 (assuming your plan was in existence at that time) simply by adopting a restated plan document which is inclusive of all amendments since that date. Though it seems illogical to adopt a document that is retroactive to 10 years ago, that is precisely what the IRS is allowing you to do!

For more details on the March 31, 2020, 403(b) plan restatement deadline, check out our prior Ask the Experts column about the subject.

NOTE: This feature is to provide general information only, does not constitute legal advice, and cannot be used or substituted for legal or tax advice.