IRS has updated its sample 403(b) plan document language

On March 11, 2015, the IRS released updates to its 403(b) "Sample Plan Provisions and Information Package." This package, which is also known as the "Listing of Required Modifications" or LRMs, contains language that vendors and volume submitters may use to draft 403(b) plan documents that will be submitted for IRS approval.

Our prototype documents have been submitted to the IRS. As previously noted, the IRS will not release any approval notices until all documents received through April 30, 2015 have been reviewed . So it could be 2016 (or later) before pre-approved 403(b) plan documents are available. We'll keep you posted as developments occur. In the meantime, you'll find an overview of the IRS's 403(b) pre-approved plan document program here.

You must keep track of everyone eligible for post-retirement
403(b) employer contributions

Many employers look to post-retirement contributions as a budget-friendly way to pay out unused vacation and/or sick leave. Employees also benefit, since they can defer taxes on an otherwise taxable benefit and potentially avoid a higher marginal tax bracket.

You can make post-retirement contributions on an employee's behalf for up to five years following the year the employee retires (or is no longer employed by you). Keep in mind, however, that under Treasury regulations such payments must stop in the month an employee dies, even if death occurs before all contributions are distributed. Amounts not paid out are forfeited and cannot be given to a former employee's estate. Depending on the situation, you may be able to increase the final month's payment to reduce forfeitures, provided the amount does not exceed that year's contribution limit. For this reason it is very important to keep track of everyone receiving post-retirement contributions. To learn more about post-retirement 403(b) employer contributions, click here.

Be sure to let your Plan Relationship Manager know if you are currently making-or are considering making-post-retirement contributions. We can help you manage these payouts and avoid making excess payments to deceased former employees.

Please contact your Plan Relationship Manager if you have questions regarding any of the items covered above.

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