IRS announces Cycle 2 preapproved 403(b) plans and other guidance 

December 19, 2024

IRS has posted on its website its list of preapproved Section 403(b) plans for the second remedial amendment cycle. Employers wishing to rely on a newly preapproved document for the second cycle need to adopt one by Dec. 31, 2026. (This deadline doesn’t apply to preapproved qualified defined benefit (DB) and defined contribution (DC) plans, which have their own remedial amendment cycles.) IRS has also provided guidance on the “restatement rule” for all preapproved plans in Announcement 2024-38.

All preapproved plans — qualified and 403(b) — are subject to six-year remedial amendment cycles. Early in each cycle, preapproved plan providers can apply for opinion letters on documents updated for changes in the qualification or 403(b) requirements. Once IRS issues opinion letters approving the documents, providers make their plans available for employers to adopt during a window announced by IRS (usually about two years). Timely adoption allows an employer to rely on the provider’s opinion letter for that cycle as if the opinion letter were the sponsor’s own determination letter. Employers that modify the preapproved document lose reliance on the provider’s opinion letter but may be able to request a determination letter.

Preapproved Section 403(b) plan program. Rev. Proc. 2019-39 established the six-year remedial amendment cycle for 403(b) plans, which previously had no IRS-sanctioned system to maintain compliant documents. Rev. Proc. 2021-37 simplified the program’s structure and aligned it with the program for Section 401(a) qualified plans. All preapproved plans are now divided into two categories: standardized and nonstandardized. Standardized plans include certain nondiscrimination safe harbor provisions, while nonstandardized plans do not have to be safe harbor plans. Both types of plans can have a single plan document or offer a main document with an adoption agreement.

Opinion letters for the second remedial amendment cycle cover changes to the 403(b) requirements on the 2022 Cumulative List in Notice 2022-8. Employers that adopt one of the new preapproved documents by Dec. 31, 2026, can rely on the provider’s opinion letter until the end of the second cycle. (IRS hasn’t yet announced that date.) Adopting employers will lose reliance on the opinion letter if they make modifications that aren’t permitted under Rev. Proc. 2021-37. (Permitted modifications are generally minor changes, such as changing a provision’s effective date, adopting certain IRS model amendments, or updating annual limitations under Sections 415 or 402(g), but may also include corrective amendments under IRS’s Employee Plans Compliance Resolution System.) However, employers making other changes may be able to request a determination letter by submitting:

• Form 5307 for modifications to a nonstandardized plan that aren’t extensive or for any preapproved plan (whether standardized or nonstandardized) with language that has been added to satisfy the requirements of Section 415 due to the required aggregation of plans
• Form 5300 for modifications that turn the preapproved plan into an individually designed plan or for other specified cases

Dec. 31, 2026, is also the deadline for eligible employers to request a determination letter on modified Cycle 2 documents.

Rev. Proc. 2019-39 contains a rule providing protection for Section 403(b) plans that are restated using Cycle 1 preapproved plan documents. The rule says that if the plan was amended prior to the restatement to comply with Section 403(b) requirements, but the restated Cycle 1 plan document doesn’t include that interim amendment, the restated plan won’t be treated as superseding the amendment. Instead, the plan will be considered compliant as long it is operated in accordance with the interim amendment. Rev. Proc. 2016-37 contains a similar rule for Cycle 3 qualified preapproved DB and DC plans. In Announcement 2024-38, IRS says it intends to issue guidance clarifying that the restatement rules continue to apply to the current remedial amendment cycles and all future cycles.

• Announcement 2024-38 (IRS, Nov. 22, 2024)
• Rev. Proc. 2021-37 (IRS, Sept. 1, 2021)
• Rev. Proc. 2019-39 (IRS, Sept. 30, 2019)
• Rev. Proc. 2016-37 (IRS, June 29, 2016)
• 403(b) preapproved retirement plans (IRS website)
• 403(b) preapproved plan program FAQs (IRS website)

• IRS begins rollout of determination letter program to 403(b) plans (June 15, 2023)
• IRS issues first cumulative list of changes for preapproved 403(b) plans (Feb. 9, 2022)
• IRS revamps 403(b) preapproved program, sets Cycle 2 review dates (Dec. 1, 2021)
• IRS creates program for 403(b) plan document compliance (Oct. 18, 2019)