430B News

On March 1, 2007, a senior tax law specialist in the IRS Employee Plans Division, Robert J. Architect, made several comments regarding the pending final regulations under section 403(b) during a speech at the Washington Non-Profit Legal Tax Conference being held in Washington, DC. Mr. Architect said that he anticipates that the final regulations will be published within the next few months, and that he expects their release by June 30 of this year. He also reportedly indicated that the effective date of the final regulations would remain January 1, 2008, although he cautioned that the effective date and other parts of the regulations are still subject to revision.

Reportedly, Mr. Architect reiterated that the final regulations will require all section 403(b) plans to satisfy the section 403(b) requirements in form and operation through a written defined contribution plan. He warned that lacking certain language in a section 403(b) plan, and not satisfying the requirements of section 403(b), will create problems as far as audits are concerned. He also suggested that the final regulations will include two new “form” requirements, one relating to the required minimum distributions rules of section 401(a)(9) and the other relating to incidental benefit requirements. Mr. Architect  said that the IRS plans to publish guidance with sample plan language after the final regulations are published, but before their effective date.

Mr. Architect’s remarks also touched on possible changes to the “universal availability” requirement. In that regard, Mr. Architect stated that the final regulations might include an exception to that requirement for institutions, such as colleges, that hire summer employees who may work more than 20 hours per week if, when hired, they are reasonably expected to work fewer than 1,000 hours in the ensuing 12 months. Mr. Architect also said that the final regulations might eliminate the current exceptions from the universal availability requirement for collective bargaining employees, visiting professors, employees who take a vow of poverty, and employees who make a one time election to take part in a government non-403(b) plan.

It is not clear how and to what extent these comments will affect the timing of issuance for the final regulations

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