How Does the New Determination Letter Program for 403(b) Plans Work?

Q: I understand that the IRS has a new determination letter program for individually designed 403(b) plans (i.e., a plan document that is not a preapproved document). Is this determination letter program only open to newly established plans, or can older plans apply as well? We sponsor a 403(b) plan, and have maintained an individually designed plan document for some time but did not file for a determination letter since there was previously not a determination letter program for 403(b) plans.

Kimberly Boberg, Taylor Costanzo, Kelly Geloneck and David Levine, with Groom Law Group, and Michael A. Webb, senior financial adviser at CAPTRUST, answer:

A: Yes, the new 403(b) plan determination letter program is open to both new and existing individually designed plans, however, you may not be able to file for a determination letter right away. For 403(b) plans that have never received a determination letter, the IRS is staggering such filings based on the plan sponsor’s Employer Identification Number (EIN). If your EIN ends in 1, 2, or 3, you can submit your determination letter application now, as submissions have been permitted since June 1. If your EIN ends in 4, 5, 6, or 7, you cannot submit your application until June 1, 2024. Finally, if your EIN ends in 8, 9, or 10, you may not file your application until June 1, 2025.

Beyond filings for initial determination letters, the program is somewhat limited (e.g., in the case of a plan termination). As the determination letter filing is somewhat complex, you will want to enlist the assistance of outside retirement plan counsel well versed in such matters before proceeding.

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.

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