Beginning June 1, 2023, the IRS is expanding its determination letter program to include certain 403(b) plans. The IRS issued a reminder May 24.
The IRS had announced on Nov. 7, 2022 in Revenue Procedure (Rev. Proc.) 2022-40 that it would allow 403(b) retirement plans used by certain public schools, churches and charities to use the same individually designed retirement plan determination letter program currently used by qualified retirement plans, such as 401(k)s. That includes modifying Revenue Procedure 2016-37 to permit 403(b) plan sponsors, beginning June 1, 2023, to submit determination letter applications for all initial individually designed retirement plans based on the sponsor’s Employer Identification Numbers (EINs).
With that expansion, plan sponsors that maintain an individually designed 403(b) plan may submit a determination letter application for an initial plan determination.
Dates. The dates by which they may do so are based on the EIN of the plan sponsor:
- EIN ends in 1, 2 or 3: submit beginning June 1, 2023.
- EIN ends in 4, 5, 6 or 7: submit beginning June 1, 2024.
- EIN ends in 8, 9 or 0: submit beginning June 1, 2025.
User Fees. The user fees for 403(b) determination letter applications are:
- Form 5300 with 100 or more participants: $2,700.
- Form 5300 with less than 100 participants: $300.
- Form 5310: $3,500.
Also beginning June 1, 2023, plan sponsors may submit an application for terminating 403(b) plans.
More to Come
The IRS says that it will be updating Form 5300, Application for Determination for Employee Benefit Plan, and Form 5310, Application for Determination Upon Termination. It will be doing so in Pay.gov to reflect the addition of 403(b) plans.
The IRS also says that it may announce other circumstances that would allow 403(b) sponsors to a submit determination application in the future.
Rev. Proc. 2022-40 is available here: https://www.irs.gov/pub/irs-drop/rp-22-40.pdf