IRS Revenue Procedure 2014-28 Eases Requirements for Pre-approved 403(b) Plans Program | Practical Law

IRS Revenue Procedure 2014-28 Eases Requirements for Pre-approved 403(b) Plans Program | Practical Law

The Internal Revenue Service (IRS) issued Revenue Procedure 2014-28, which eases the requirements for prototype and volume submitter plans to participate in its Internal Revenue Code (IRC) Section 403(b) pre-approved plans program.

IRS Revenue Procedure 2014-28 Eases Requirements for Pre-approved 403(b) Plans Program

by Practical Law Employee Benefits & Executive Compensation
Published on 26 Mar 2014 • USA (National/Federal)
The Internal Revenue Service (IRS) issued Revenue Procedure 2014-28, which eases the requirements for prototype and volume submitter plans to participate in its Internal Revenue Code (IRC) Section 403(b) pre-approved plans program.
On March 25, 2013, the IRS issued Revenue Procedure 2014-28 ( (March 26, 2014)), which modifies Revenue Procedure 2013-22 ( (April 29, 2013)) and eases the requirements for prototype and volume submitter plans to obtain opinion and advisory letters for Internal Revenue Code (IRC) Section 403(b) pre-approved plans (403(b) plans). Revenue Procedure 2013-22 initially established a program for the issuance of opinion and advisory letters under IRC Section 403(b) (403(b) letter program) (see Legal Update, IRS Establishes Program for Pre-approved 403(b) Plans in Revenue Procedure 2013-22).
The 403(b) letter program offers employers that maintain a 403(b) plan an alternative to adopting an individually designed plan in order to satisfy the written plan requirement of the 403(b) regulations issued in 2007. Under the program, the IRS issues opinion or advisory letters to prototype and volume submitter plans (acting on behalf of adopting employers) on whether the 403(b) prototype or 403(b) volume submitter plan meets the requirements of IRC Section 403(b).
Under Revenue Procedure 2013-22, a person qualifies as an IRC Section 403(b) pre-approved plan sponsor if it expects at least 30 eligible employers to adopt the 403(b) plan. Revenue Procedure 2014-28 reduces this requirement to 15 eligible employers.
Revenue Procedure 2014-28 also makes it easier for a person to qualify as a mass submitter by reducing the number of prototype sponsors or volume submitters on whose behalf the person must submit opinion or advisory letter applications from 30 to 15. Each of the prototype sponsors or volume submitters must utilize, on a word-for-word identical basis, the same basic plan document or specimen plan.
Revenue Procedure 2014-28 also includes changes for minor modifiers of 403(b) plans. Specifically, it allows a:
  • Person to sponsor a plan as a minor modifier of an IRC Section 403(b) volume submitter specimen plan of a mass submitter, under the conditions listed in Section 11.03 of Revenue Procedure 2013-22.
  • Mass submitter to file an application for an IRC Section 403(b) plan advisory letter on behalf of a minor modifier of the mass submitter's plan. Previously, Revenue Procedure 2013-22 only permitted an application for an advisory letter for a 403(b) volume submitter specimen plan to be filed by a:
    • volume submitter practitioner;
    • mass submitter with respect to its mass submitter plan; or
    • a mass submitter on behalf of a word-for-word identical adopter of the mass submitter's plan.
Revenue Procedure 2013-22 required that a mass submitter's initial submission under the 403(b) program include applications filed on behalf of at least 30 word-for-word identical adopters. Revenue Procedure 2014-28:
  • Reduces the word-for-word identical adopter requirement from 30 to 15.
  • Allows a mass submitter to submit additional applications on behalf of other pre-approved plan sponsors (as minor modifiers of the mass submitter's IRC Section 403(b) volume submitter specimen plan) after the 15 word-for-word identical adopter requirement has been met.
Revenue Procedure 2014-28 extends the deadline to submit 403(b) plans to the IRS for opinion and advisory letters to April 30, 2015.
The Appendix to Revenue Procedure 2014-28 also includes an application for approval of a 403(b) plan, which is a revised version of the application included in the Appendix to Revenue Procedure 2013-22.

Practical Implications

The changes in Revenue Procedure 2014-28 are intended to increase the number of prototype plan sponsors, volume submitters and employers that participate in the 403(b) program, which may ease some of the burdens and complexities associated with an employer sponsoring an individually designed 403(b) plan.