IRS begins rollout of determination letter program to 403(b) plans 

As of June 1, certain sponsors of individually designed 403(b) plans can apply for an IRS determination letter on the status of their plan documents. Since 2009, all employers offering 403(b) plans (except for some churches) have had to maintain a written plan document to retain their plan’s tax-favored status. Although IRS established a preapproved plan program for 403(b) plans in 2013, this is the first opportunity for sponsors of individually designed 403(b) plans to seek IRS review of their documents. Most 403(b) plans will now be eligible for an initial determination letter, even if the plan has existed for many years.

Staggered opening for initial determinations. IRS is currently accepting applications for an initial determination from sponsors with employer identification numbers (EINs) ending in 1, 2 or 3. Sponsors with EINs ending in 4, 5, 6 or 7 must wait another year to request an initial determination, and sponsors with EINs ending in 8, 9 or 0 have to wait an additional two years.

Determinations for terminating plans. IRS is also accepting applications for terminating 403(b) plans. Any sponsor that’s terminating a 403(b) plan can request a determination letter, regardless of EIN.

Additional circumstances possible. In the future, IRS may open the determination letter program to 403(b) plans for other circumstances, such as changes in law affecting 403(b) plan documents. Rev. Proc. 2022-40, which announced the expansion of the determination letter program to 403(b) plans, said IRS didn’t intend to open the program in 2023 for circumstances other than those already allowed. However, the agency intends to request comments periodically and annually reconsider its position.

• Employee Plans News (IRS, May 24, 2023)
• Rev. Proc. 2022-40 (IRS, Nov. 7, 2022)
• Determination letters for individually designed retirement plans FAQs (IRS)
• Apply for a determination letter — individually designed plans (IRS)
• 403(b) pre-approved plans (IRS)

• IRS expands determination letter program for 403(b) plans and more (Dec. 15, 2022)
• IRS revamps 403(b) preapproved program, sets Cycle 2 review dates (Dec. 1, 2021)
• IRS creates program for 403(b) document compliance (Oct. 18, 2019)