IRS Releases Model Plan Language and Additional 403(b) Guidance

On November 27, 2007, the Internal Revenue Service has released a copy of the Revenue Procedure 2007-71. This new information gives school districts and other employers model plan language for their written plans and other guidance in connection with the final section 403(b) regulations issued on July 26, 2007.

The final revenue procedure highlights:

1. Ensures if a public school district adopts the Model Plan from the IRS, then the plan document is in compliance with the new regulations.(No employer but a public school district gets this benefit.) (Click this link to get a copy of the new Model Plan.)
   
   
2. If a school district does not adopt this Model Plan Language, then it may submit plan to IRS for a private letter ruling if it counts official "blessing" from IRS.
   
   
3. Provides guidance on "orphan" contracts issued before January 1, 2009.
   
   
4. Clarifies information sharing agreements are not needed for exchanges if the vendor is listed in the plan or is currently receiving ongoing salary reductions (flow).
   
   
5. Re-exchange procedure back into 403(b) plan. It will be allowed until 7/1/09.
   
   
6. IRS is encouraging multiple vendors and product options for 403(b) plans