As an employer, you may be aware that the Internal Revenue Service (IRS) requires tax-qualified retirement plans be documented in a detailed written plan document.
Shortly after the 403(b) regulations were updated in 2008, the IRS indicated its intent to establish a program to allow for approval of 403(b) prototype plans. A prototype plan is a plan that is made available by a vendor that can be adapted by more than one employee. The IRS program allows vendors to file prototype plan documents with the IRS and receive approval that the plan document includes all Internal Revenue Code (IRC) requirements.
Prototype plan documents
Vendors have until March 31, 2020 to file a prototype plan document with the IRS for approval. AFPlanServ® is ahead of the curve and has been using its IRS approved prototype plan for its customers since 2017. A prototype plan document is an attractive option for employers to help ease their administrative burden and assure their 403(b) plan document meets IRC qualification requirements.
Penalties could be involved for certain plans
If your school district is audited and the IRS finds that your plan is out of compliance, there could be fines, penalties, or a disqualification of your entire plan.
To ensure your 403(b) plan document is compliant, you should verify with your third-party Plan administrator that you are operating under an IRS approved prototype plan document.
If you are self-administered and not using a plan administrator, you should consider the following:
- Where did your plan document come from originally?
- Is it an IRS approved prototype plan document?
If you are a customer of AFPlanServ, your current plan document is updated to meet this standard and you do not need to take any action. If you would like a copy of your prototype plan document, please contact us.
American Fidelity Can Help
If you're interested in plan administration services, we can help. With over 55 years of experience working with education employees, we understand your needs. To help your plans operate in compliance with the Internal Revenue Code, consider AFPlanServ for a different opinion.