News / Resources

Terry Connerton, Of Counsel in the firm's Washington, D.C., office, authored an article, "Final 403(b) Regulations Require Plan Sponsors' Immediate Attention," which was published in the September 22 edition of Bloomberg Law Reports: Employee Benefits.

According to Connerton, Section 403(b) plans, tax-sheltered annuity programs established in 1958 for employees by public schools and tax-exempt organizations, will be subject to new IRS regulations, generally effective January 1, 2009.

Connerton's article details the new provisions in the regulations, including:

• Written plan documentation
• Nondiscrimination requirements
• New rules on "exchanges" and "transfers"
• Termination of 403(b) plans
• Contributions on behalf of former employees

Connerton also addresses when nongovernmental 403(b) plans are covered by ERISA and what the new filing requirements are for 403(b) plans covered by ERISA.

Connerton concludes with advice on what employers should be doing with regard to the new regulations, including:

• Making sure that the 403(b) vendors are prepared to comply with the new regulations
• Having current 403(b) plans or a new 403(b) plan reviewed for legal compliance
• Reviewing annuity contracts or custodial account agreements for compliance with the new regulations and consistency with the main plan documents
• Reviewing service provider contracts with the vendor(s)
• Determining if 403(b) programs are covered by ER ISA