403(b) Outlook: IRS Releases Guidance for Implementing Final 403(b) Regulations

On Nov. 27, the Internal Revenue Service released Revenue Procedure 2007-71 (PDF) which contains guidance for implementing the changes required by the final 403(b) regulations issued in July. The Revenue Procedure is effective on Dec. 17, 2007.

The new guidance focuses primarily on two subjects:

Transitional rules for contracts issued prior to the regulations' effective date (Jan. 1, 2009) including contract exchanges with vendors not authorized to accept contributions under the plan.
Model plan document language for salary reduction plans for public schools. The final 403(b) regulations generally require all 403(b) plans (including governmental plans) to have written plan documents in place by Jan. 1, 2009.

The Rev. Proc. also makes clear that the deadline for making any plan amendment required by the 403(b) regulations is generally Jan. 1, 2009.

We will be providing a more detailed analysis of the Revenue Procedure in the near future. You can learn more from TIAA-CREF's Analysis of the final 403(b) regulations (PDF) and our related Administrator Checklist (PDF).

The tax information contained herein is not intended to be used, and cannot be used by any taxpayer, for the purpose of avoiding tax penalties that may be imposed on the taxpayer. It was written to support the promotion of the products and services addressed herein. Taxpayers should seek advice based on their own particular circumstances from an independent tax advisor.

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