Pension Protection Act Blog

Here is a pretty good ERISA pop quiz written Barbara P. Pletcher of the law firm of Trucker Huss. In 5 questions, Ms. Pletcher covers a wide variety of ERISA topics. See if you can answer all 5 questions correctly. (hat tip to BenefitsLink)

Technorati Tags: Pension Protection Act, ppa, Trucker Huss, Barbara Pletcher, ERISA

Tucked away toward the end of the Pension Protection Act are two sections which made changes to Railroad Retirement. Section 1002 and Section 1003 both became effective on August 17, 2007, one year after the date PPA was enacted. Section 1002 is Entitlement of Divorced Spouses to Railroad Retirement Annuities Independent of Actual Entitlement of Employee, and it states:

(a) IN GENERAL.—Section 2 of the Railroad Retirement Act of 1974 (45 U.S.C. 231a) is amended—

(1) in subsection (c)(4)(i), by striking ‘‘(A) is entitled to an annuity under subsection(a)(1) and (B)’’; and

(2) in subsection (e)(5), by striking ‘‘or divorced wife’’ the second place it appears.

Section 1003 is Extension of Tier II Railroad Retirement Benefits to Surviving Former Spouses Pursuant to Divorce Agreements, and it states:

(a) IN GENERAL.—Section 5 of the Railroad Retirement Act of 1974 (45 U.S.C. 231d) is amended by adding at the end the following:

‘‘(d) Notwithstanding any other provision of law, the payment of any portion of an annuity computed under section 3(b) to a surviving former spouse in accordance with a court decree of divorce, annulment, or legal separation or the terms of any court-approved property settlement incident to any such court decree shall not be terminated upon the death of the individual who performed the service with respect to which such annuity is so computed unless such termination is otherwise required by the terms of such court decree.’’

Just as quickly as Congress added subsection (d) to Section 5 of the Railroad Retirement Act, Congress has decided to delete subsection (d) of Section 5. In Section 11 of the Pension Protection Technical Corrections Act, which is currently pending before Congress, it states:

SEC. 11. AMENDMENTS RELATED TO TITLE X.
(a) AMENDMENTS TO RAILROAD RETIREMENT ACT.—

(1) Section 14(b) of the Railroad Retirement Act of 1974 (45 U.S.C. 231m(b)) is amended by adding at the end the following:

‘‘(3)(i) Payments made pursuant to paragraph (2) of this subsection shall not require that the employee be entitled to an annuity under section 2(a)(1) of this Act: Provided, however, That where an employee is not entitled to such an annuity, payments made pursuant to paragraph (2) may not begin before the month in which the following three conditions are satisfied:
‘‘(A) The employee has completed ten years of service in the railroad industry or, five years of service all of which accrues after December 31, 1995.

‘‘(B) The spouse or former spouse attains age 62.

‘‘(C) The employee attains age 62 (or if deceased, would have attained age 62).

‘‘(ii) Payments made pursuant to paragraph (2) of this subsection shall terminate upon the death of the spouse or former spouse, unless the court document provides for termination at an earlier date. Notwithstanding the language in a court order, that portion of payments made pursuant to paragraph (2) which represents payments computed pursuant to section 3(f)(2) of this Act shall not be paid after the death of the employee.

‘‘(iii) If the employee is not entitled to an annuity under section 2(a)(1) of this Act, payments made pursuant to paragraph (2) of this subsection shall be computed as though the employee were entitled to an annuity.’’.

With the Pension Protection Technical Corrections Act still pending, it is possible that more changes will be made before PPTCA heads to the President for signature.

Technorati Tags: Pension Protection Act, ppa, Railroad Retirement, Pension Protection Technical Corrections Act, PPTCA, ERISA

Fast on the heels of LaRue and MetLife, the U.S. Supreme Court is taking a look at another ERISA case - Kennedy v. Plan Administrators for DuPont Savings and Investment Plan, No. 07-636. The Petitioner, the estate of the participant, is required to file their merit brief today with the Court.

Kennedy is a case from the 5th Circuit Court of Appeals. In 1971, while employed by DuPont, Kennedy married Mrs. Kennedy. In 1974, Kennedy signed a beneficiary designation form identifying Mrs. Kennedy as his sole beneficiary for plan purposes. Mr. and Mrs. Kennedy divorced in 1994, and Mrs. Kennedy agreed to “be divested of all right, title, interest, and claim in or to … the proceeds therefrom, and any other rights related to any …. retirement plan, pension plan, or like benefit program existing by reason of” Mr. Kennedy’s employment. A QDRO was issued in 1997 providing disbursement instructions for Mr. Kennedy’s employee benefits plans but failed to include disbursement instructions for the DuPont Savings and Retirement Plan.

Mr. Kennedy retired from DuPont in 1998 and died in 2001, without ever executing another beneficiary form replacing Mrs. Kennedy as his beneficiary for purposes of the DuPont Savings and Retirement Plan. Mr. and Mrs. Kennedy’s daughter, Kari, was appointed executrix of Mr. Kennedy’s estate, and sent a letter to DuPont demanding that Mr. Kennedy’s account balance in the DuPont Savings and Retirement Plan be distributed to the estate. Kari Kennedy put DuPont on notice that the estate claimed the funds pursuant to Texas Family Code section 9.302, which generally provides that a spouse’s designation as a retirement plan beneficiary is invalidated by a subsequent divorce. Mrs. Kennedy also made a claim on DuPont for Mr. Kennedy’s account balance, which DuPont paid to her based on the designation of beneficiary signed by Mr. Kennedy. The estate then filed an action to recover Mr. Kennedy’s account balance, and DuPont filed a third-party claim, asserting that if Mrs. Kennedy was not the correct beneficiary, the plan was entitled to have the account balance returned to the plan. The trial court granted summary judgment in favor of the estate, and Mrs. Kennedy appealed.

The 5th Circuit vacated the trial court’s grant of summary judgment in favor of the estate, and rendered judgment for DuPont. The 5th Circuit reasoned that, as a QDRO for the DuPont Savings and Retirement Plan was never submitted to DuPont, and as QDROs are the specific mechanism provided by ERISA for addressing the elimination of a spouse’s interest in plan benefits, and as that mechanism was not invoked, therefore requiring DuPont to recognize the waiver in this situation would conflict with ERISA by determining rights to pension plan benefits in a manner not authorized by the QDRO provisions.

The estate then appealed the 5th Circuit’s decision to the U.S. Supreme Court, and will file their merit brief today. The Court has not set oral argument yet for this case.

Additional Information:

Petition for Cert. filed by the estate and Brief in Opposition, courtesy of SCOTUSblog.

Technorati Tags: Pension Protection Act, ppa, Kennedy, DuPont, QDRO, Supreme Court, ERISA

The Dept. of Labor has issued 3 pieces of guidance on qualified default investment alternatives (QDIAs) - a 2-page correcting amendment for Default Investment Alternatives Under Participant Directed Individual Account Plans, a 2-page Fact Sheet, and Field Assistance Bulletin No. 2008-03, which is 12 pages long.

Section 624(a) of the Pension Protection Act added ERISA section 404(c)(5)(A). It addressed how the plan should invest a participant’s account balance when the participant has failed to provide investment instructions to the plan administrator or plan sponsor. On October 24, 2007, the DOL issued final regulations for ERISA section 404(c)(5) providing that a fiduciary of a plan that complies with the final regulation is not liable for any loss, or by reason of any breach, that occurs as a result of investment in a qualified default investment alternative. The final regulation also described types of investments which qualifies as default investment alternatives. The correcting amendment is effective on April 30, 2008, and applies on or after December 24, 2007.

This correcting amendment to those final regulations address 3 issues. First, a correction is made to the “round-trip” restriction contained in the final regulation. The DOL states that the original “round-trip” restriction was too broad and should not have been included as an example of an impermissible restriction. “Round-trip” restrictions affect a participant’s ability to reinvest in the QDIA for a limited period of time. Second, the DOL is clarifying that a committee comprised primarily of employees of the plan sponsor can manage a QDIA when the plan document names that committee as a named fiduciary. Finally, DOL is changing the final regulation to provide that stable value products or funds must investment primarily in investment products that are backed by state or federally regulated financial institutions, or the principal and accrued interest on the investment products may be backed by contracts issued by such institutions.

Field Assistance Bulletin 2008-03 is written in a Q&A format, addressing issues such as the scope of the QDIA final regulations, the notice requirements, the 90-day limitatino on fees and restrictions, QDIA management and asset allocation, 120-day capital preservation QDIA, and grandfather-type relief for stable value funds.

Technorati Tags: Pension Protection Act, ppa, QDIA, qualified default investment alternatives, 404(c)(5), Field Advisory Bulletin 2008-03, ERISA

Paul Secunda has an interesting post today on the Workplace Prof Blog about IBM reclassifying workers from salaried to hourly. The corporate buzzword for this is “reclassification”, and the story, which originated on NPR Marketplace, also mentions FedEx reclassifying drivers as independent contractors, and Allstate reclassifying agents as independent contractors.

For plan documents, the grandfather of reclassification is Microsoft. Several years ago, Microsoft reclassified employees as independent contractors, and within their plan document, excluded employees classified as independent contractors from becoming participants. Microsoft’s reclassification language spread through qualified plan documents, and is memorialized in IBM’s plan document, as of the January 1, 2005 restated plan, as:

“1.20. “Employee” means an employee of any Employer who receives stated compensation other than a pension, severance pay, retainer, or fee under contract. The term “Employee” excludes any Leased Employee and any person who is included in a unit of employees covered by a collective bargaining agreement that does not provide for his membership in the Plan. Any person deemed to be an independent contractor by any Employer and paid by the Employer in accordance with its practices for the payment of independent contractors, including the provision of tax reporting on Internal Revenue Service Form 1099, shall be excluded from the definition of Employee for all purposes under the Plan, notwithstanding any subsequent reclassification of such person for any purpose under the Code, whether agreed to by the Employer or adjudicated under applicable law.”

Section 1.46 of IBM’s plan document defines “Regular Employee” as:

“1.46. “Regular Employee” means an Employee as so defined by the rules and regulation of his Employer, who is (i) compensated by salary or by commission, or partly by salary and partly by commission, (ii) subject to the Employer’s performance evaluation program, and (iii) employed for an indefinite period.”

Eligibility is contained in Section 3.01 of IBM’s plan document, which states:

3.01. Eligibility

(a) Except as provided in subsection (c), each Employee of an Employer shall be eligible to become a Participant at any time during service as a Regular Employee.

In this type of plan which restricts eligibility to Regular Employees as defined by the plan document, and Regular Employees are defined as employees paid by salary or comission, hourly employees are not eligible to participate in the 401(k) plan. For plan documents, this is the real issue with Reclassification because it can be used by some companies to restrict plan participation.

Once an employee becomes a participant in the plan, they cannot be reclassified out of participating. For reclassified employees, Section 3.04(a) of IBM’s plan states that:

3.04. Effect of Status Change on Participation.

(a) Except as provided in subsection (b), a Participant who

(i) has been employed by the Employer or an Affiliate as a Regular Employee, then

(ii) ceases to be a Regular Employee, but

(iii) remains in the employ of an Employer or an Affiliate

shall continue to be a Participant in the Plan, but shall not be eligible to receive allocations of Deferred Cash Contributions or Matching Contributions, and shall not be eligible to make After-Tax Contributions, while his employment status is other than as a Regular Employee.

And this really is the heart of Reclassification when is comes to qualified plan documents - the reclassification has an impact plan eligibility and on employer contributions into the plan. For participants who are reclassified out of employer contributions, they remain as participants but their accounts will not grow as the employer prospers. The NPR Marketplace story states that IBM reported a 25 percent jump in profits a couple of weeks ago so it is not clear why IBM decided to engage in reclassification.

Technorati Tags: Pension Protection Act, ppa, reclassification, IBM, eligibility, independent contractor, NPR Marketplace, Workplace Prof, Paul Secunda, ERISA

Justice Scalia, on 60 Minutes this last Sunday, mentioned that his original plan when he was appointed to the Supreme Court had been to retire from the Court at age 65 because justices can retire from the Court at age 65 at 100% of annual compensation. Instead, he decided to stay on the Court and has continued to work past age 65. His comments reminded me of Section 905 of the Pension Protection Act.

Section 905 is about distributions during working retirement. It is one of my favorite parts of the Pension Protection Act because it was part of Congress re-conceptualizing what retirement age and retirement date should mean to a participant who does not want penalized for continuing to work past normal retirement age. Section 905(b) added Code section 401(a)(36), which states:

(36) Distributions During Working Retirement. A trust forming part of a pension plan shall not be treated as failing to constitute a qualified trust under this section solely because the plan provides that a distribution may be made from such trust to an employee who has attained age 62 and who is not separated from employment at the time of such distribution.

Section 905 applies to distributions in plan years beginning after December 31, 2006.

On May 22, 2007, the IRS released Final Regulations on Distributions from a Pension Plan Upon Attainment of Normal Retirement Age. Within these 4 short pages of regulations, the IRS added Treas. Reg. 1.401(a)-1(b)(3), which states:

(3) Benefit distribution prior to retirement. For purposes of paragraph (b)(1)(i) of this section, retirement does not include a mere reduction in the number of hours that an employee works. Accordingly, benefits may not be distributed prior to normal retirement age solely due to a reduction in the number of hours than an employee works.

Paragraph (b)(1)(i), otherwise known as Treas. Reg. 1.401(a)-1(b)(1)(i), states:

(i) In order for a pension plan to be a qualified plan under section 401(a), the plan must be established and maintained by an employer primarily to provide systematically for the payment of definitely determinable benefits to its employees over a period of years, usually for life, after retirement or attainment of normal retirement age (subject to paragraph (b)(2) of this section). A plan does not fail to satisfy this paragraph (b)(1)(i) merely because the plan provides, in accordance with section 401(a)(36), that a distribution may be made from the plan to an employee who has attained age 62 and who is not separated from employment at the time of such distribution.

The IRS then released Notice 2007-69 to provide guidance these final regulations.

Technorati Tags: Pension Protection Act, ppa, scalia, 401(a)(36), 1.401-1(b)(1), Notice 2007-69, working retirement, phased retirement, ERISA

The IRS issued a correction to the Proposed Regulations on Hybrid Retirement Plans, commonly known as the proposed cash balance plan regulations, which the Service issued on December 27, 2007. Besides correcting a few grammatical errors, the IRS has made a significant change in Proposed Treas. Reg. section 1.411(a)(13)-1. (hat tip to BenefitsLink.com)

The correction states:

1. On page 73683, column 3, in the preamble, first paragraph of the column, line 15, the language “reasonably expected to result in a larger” is corrected to read “reasonably expected to result in a smaller”.

§1.411(a)(13)-1 [Corrected]
4. On page 73691, column 1, §1.411(a)(13)-1(d)(3)(ii), line 18, the language “larger annual benefit at normal” is corrected to read “smaller annual benefit at normal”.

5. On page 73691, column 2, §1.411(a)(13)-1(d)(3)(iii)(B), line 9, the language “reasonably expected to result in a larger” is corrected to read “reasonably expected to result in a smaller”.

When these changes are incorporated into the text of the proposed cash balance regulations, the preamble now states:

The proposed regulations use the term statutory hybrid benefit formula to describe the portion of a defined benefit plan that is an applicable defined benefit plan described in section 411(a)(13)(C)(i) or the portion of the plan that has a similar effect. Specifically, the proposed regulations would define a statutory hybrid benefit formula as a benefit formula that is either a lump sum-based benefit formula or a formula that has an effect similar to a lump sum-based benefit formula. For this purpose, under the proposed regulations, a benefit formula under a defined benefit plan has an effect similar to a lump sum-based benefit formula if the formula provides that a participant’s accrued benefit payable at normal retirement age (or at benefit commencement, if later) is expressed as a benefit that includes periodic adjustments (including a formula that provides for indexed benefits described in section 411(b)(5)(E)) that are reasonably expected to result in a smaller larger annual benefit at normal retirement age (or at commencement of benefits, if later) for the participant, when compared to a similarly situated, younger individual who is or could be a participant in the plan. Thus, a benefit formula under a plan has an effect similar to a lump sum-based benefit formula if the right to future adjustments accrues at the same time as the benefit that is subject to the adjustments.

When incorporated into proposed Treas. Reg. §1.411(a)(13)-1(d)(3), it now states:

(d) Definitions–(1) In general. The definitions in this paragraph (d) apply for purposes of this section.

(2) Lump sum-based benefit formula. The term lump sum-based benefit formula means a lump sum-based benefit formula as defined in Sec. 1.411(b)(5)-1(e)(3).

(3) Statutory hybrid benefit formula–(i) In general. A statutory hybrid benefit formula means a benefit formula that is either a lump sum-based benefit formula or a formula that is not a lump sum-based benefit formula but that has an effect similar to a lump sum-based benefit formula.

(ii) Effect similar to a lump sum-based benefit formula. Except as provided in paragraph (d)(3)(iii) of this section, a benefit formula under a defined benefit plan that is not a lump sum-based benefit formula has an effect similar to a lump sum-based benefit formula if the formula provides that a participant’s accumulated benefit (within the meaning of Sec. 1.411(b)(5)-1(e)(2)) payable at normal retirement age (or benefit commencement, if later) is expressed as a benefit that includes the right to periodic adjustments (including a formula that provides for indexed benefits under Sec. 1.411(b)(5)-1(b)(2)) that are reasonably expected to result in a smaller larger annual benefit at normal retirement age (or benefit commencement, if later) for the participant than for a similarly situated, younger individual (within the meaning of Sec. 1.411(b)(5)-1(b)(5)) who is or could be a participant in the plan. A benefit formula that does not include periodic adjustments is treated as a formula with an effect similar to a lump sum-based benefit formula if the formula is otherwise described in the preceding sentence and the adjustments are provided pursuant to a pattern of repeated plan amendments. See Sec. 1.411(d)-4, A-1(c)(1).

(iii) Exceptions–(A) Post-retirement benefit adjustments. Post-annuity starting date adjustments of the amounts payable to a participant (such as cost-of-living increases) are disregarded in determining whether a benefit formula under a defined benefit plan has an effect similar to a lump sum-based benefit formula.

(B) Certain variable annuity benefit formulas. If the assumed interest rate used for purposes of the adjustment of amounts payable to a participant under a variable annuity benefit formula is at least 5 percent, then the adjustments under the variable annuity benefit formula are not treated as being reasonably expected to result in a smaller larger annual benefit at normal retirement age (or benefit commencement, if later) for the participant than for a similarly situated, younger individual (within the meaning of Sec. 1.411(b)(5)-1(b)(5)) who is or could be a participant in the plan, and thus such a variable annuity benefit formula does not have an effect similar to a lump sum-based benefit formula.

(C) Contributory plans. A benefit formula under a defined benefit plan that provides for a benefit equal to the benefit properly attributable to after-tax employee contributions does not have an effect similar to a lump sum-based benefit formula. See section 411(c)(2) for rules for determining benefits attributable to after-tax employee contributions.

The IRS was accepting comments on the Proposed Regulations on Hybrid Retirement Plans until March 27, 2008.

Technorati Tags: Pension Protection Act, ppa, IRS, cash balance, hybrid retirement plan, 1.411(b)(3), ERISA

Today, the U.S. Supreme Court heard oral argument in Metropolitan Life Ins. Co. v. Glenn, No. 06-923. MetLife v. Glenn is a case from the 6th Circuit Court of Appeals about conflicts of interest for ERISA administrators. The 6th Circuit reversed the judgment of the district court that MetLife’s decision finding Glenn no longer totally disabled was not arbitrary and capricious, and then remanded the case to the district court for further proceedings. MetLife appealed the 6th Circuit’s decision to the U.S. Supreme Court, and it was that appeal which the Supreme Court heard today. I wrote a summary of the 6th Circuit’s opinion here a few months ago.

From the transcript of the oral argument today, it is difficult to determine which way this case is going to be decided by the Court. The transcript is an excellent read of how oral argument before the Court can go horribly wrong for some attorneys. The Justices were very active today, and the questioning itself is well worth reading. The depth of questions from the Justices is more than matched by the number of questions and the rapidity of questioning. The first 20 pages of the transcript is a lesson within itself of how an attorney can manage not to complete a sentence when being questioned by the Justices.

Whichever way the Court decides this case, the transcript of the oral argument is clear that the serious ERISA issue involved in this case is receiving a lot of attention from the Court.

Technorati Tags: Pension Protection Act, ppa, Supreme Court, Metlife, Glenn, No. 06-923, conflict of interest, ERISA

Each year, the IRS issues the Guidance Priority List, containing the list of tax issues that the Service intends to address by issuing regulations, revenue rulings, revenue procedures, notices and other published administrative guidance. In Notice 2008-47, the IRS is inviting the tax community to submit recommendations by May 31, 2008, for guidance to be included on the list this year.

The Guidance Priority List is a pretty good indication of what to expect from the IRS in the coming year. A review of last year’s Priority Guidance Plan compared to the guidance actually issued by the IRS since July 1, 2007, shows a pretty close match between the issues the IRS intended to address between July 1, 2007 to June 30, 2008, and the issues the IRS has actually addressed so far.

One item not included in Notice 2008-47 is expected guidance on the Pension Protection Technical Corrections Act. This is because the list only covers items which were enacted into law, and PPTCA is not quite there yet. PPTCA was received by the Senate on March 31, 2008, and placed on the Senate Legislative Calendar. This does not mean that the IRS will not issue guidance for PPTCA before June 30, 2009, if PPTCA does not make the guidance priority list. The IRS updates the list throughout the year, so guidance for new laws can be added to the list as they are enacted.

Technorati Tags: Pension Protection Act, ppa, Guidance Priority List, IRS, Notice 2008-47, ERISA

In the pension geek handbook, Chapter Three is devoted to Urban Plan Legends. You know those stories - someone worked at a firm with an ERISA attorney who went to law school with another ERISA attorney who knows a guy who….. One of my favorite Urban Plan Legends is the one about the 403(b) prototype plan document. This one goes something like this - they know someone who is using a 403(b) prototype plan document approved by the IRS, or they know a guy who knows a guy who has a determination letter issued for their 403(b) prototype plan document. Every now and then, I will see a copy of a Form 5500 filed with the IRS for a 403(b) plan containing Code 3E on Line 8, which is the plan sponsor letting the IRS know that they wrongly believe that they are using a 403(b) plan document which has been pre-approved by the IRS.

The reason this is an Urban Plan Legend is there are no 403(b) prototype or volume submitter plan documents. They do not exist. The IRS does not issue opinion/advisory letters, or determination letters, for 403(b) plans.

The IRS has tried to bust this myth on several occasions. In 2004, Carol Gold, when she was Director of Employee Plans for the IRS, addressed this 403(b) urban legend in a Special Edition of Employee Plans News, released by the IRS on November 17, 2004. The article was titled “A Determination Letter Program for 403(b) Plans?”, and was prefaced by this Editor’s Note:

With the long-anticipated issuance of guidance on 403(b) plans now a reality, Carol Gold, Director of EP, wanted to address a related topic that has received some public interest: Will EP establish a DL program for 403(b) plans? Ms. Gold has prepared some comments below on this subject.

Ms. Gold went on to discuss that, while a determination letter program for 403(b) plans is on the distant horizon, it is not coming soon. That was in 2004. Jump forward to the Spring 2008 edition of Employee Plan News, released by the IRS just a few weeks ago, and it says:

Andrew E. Zuckerman, Director, Employee Plans Ruling and Agreements, has indicated that Employee Plans is developing programs for 403(b) plans that are similar to the current programs offered for 401(a) tax-qualified plans (i.e. a determination letter program and a pre-approved plan program). While it is unlikely that the new 403(b) programs will be in place by December 31, 2008, the effective date of the 403(b) final regulations, the plan sponsor must have a written plan by January 1, 2009. Thus, employers maintaining 403(b) plans should take appropriate steps to ensure their programs are in writing by December 31, 2008.

With the written plan document requirement contained in the Final 403(b) Regs becoming a reality in several months, this Urban Plan Legend is taking on new life. For pension geeks trying to explain why their 403(b) plan does not have an opinion/advisory letter or a determination letter, a quick trip to Rev. Proc. 2005-16 and Rev. Proc. 2008-6 provides all the explanation needed to debunk this plan myth. Section 6.03(6) of Rev. Proc. 2005-16 states:

“.03 Areas Not Covered by Opinion Letters - Opinion letters will not be issued for:…(6) Annuity contracts under section 403(b).”

Section 16.02(6) of Rev. Proc. 2005-16 states:

“02. Areas Not Covered by Advisory Letters - Advisory letters will not be issued for:…(6) Annuity contracts under section 403(b).”

Section 3.02 of Rev. Proc. 2008-6 states that determination letters will not be issued for issues involving Code section 403 other than 403(a).

With no opinion/advisory letters, or determination letters, issued by the IRS for 403(b) plan documents, there can be no prototype or volume submitter 403(b) plan documents because, for a plan to be considered a prototype or volume submitter plan by the IRS, the plan document must have been issued a valid opinion/advisory letter. No valid opinion/advisory letter = no prototype or volume submitter plan document. Thus, the existence of the 403(b) prototype plan document is just another urban plan legend which really should be put to rest before more plan sponsors are confused into using Code 3E on Line 8 of Form 5500.

My firm writes some terrific 403(b) plan documents, and when the IRS does open the opinion/advisory letter program for 403(b) plans later this year or early next year, my firm plans on being one of the first to file and receive opinion/advisory letters for our 403(b) plan documents.

Technorati Tags: Pension Protection Act, ppa, 403(b), Rev. Proc. 2005-16, Rev. Proc. 2008-6, IRS, ERISA