Nonprofits Consider Terminating 403(b) Plans
We’ve received a report from the Association for Advanced Life Underwriting on 403(b) plan termination. The AALU says “Section 403(b) plans are facing major changes in 2009. Not only do these plans have to be restated (or documented) to comply with IRS regulations that were effective January 1, 2009, but section 403(b) plans now have to file full reports (including audits) on Form 5500. Because of these new requirements and other concerns, many nonprofit organizations that sponsor 403(b) plans are considering terminating those plans.” The report details important issues about plan termination, noting that the “the IRS’ chief expert . . has often been quoted as saying in some cases it may not even be possible to terminate a 403(b) plan.”
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