IRS cuts non-profits slack on 403(b) regs

The Internal Revenue Service is giving non-profit groups more time to comply with the new 403(b) regulations. Those regs, slated to go into effect Jan. 1, require that retirement plans run by non-profit groups must have new plan document rules in place. The IRS announced that it is extending the deadline to Dec. 31, and advisers have said that many school districts are still behind on meeting these regulations. A 403(b) plan is a retirement plan that K-12 schools, universities, religious organizations and other non-profit entities employ. The new regulations are forcing many non-profit groups to make significant changes to their retirement plans, including reducing the number of vendors they use. Non-profit districts must have adopted a plan in place by Dec. 31. During 2009, all employers that offer 403(b) plans must try to update their plan retroactively so that it can comply with the new regulations. The IRS plans to issue further guidance on 403(b) plans, including revenue-procedure-establishing programs for 403(b) plans to obtain IRS approval of the plan document and allowing these plans to make changes to fix plan provisions retroactively.