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Riding Out the Storm- 403(b) & 457(b) Retirement Plan Issue

Riding Out the Storm- 403(b) & 457(b) Retirement Plan Issue. Presentation Overview. Public School 403(b) Plan Document Requirements Common 403(b) & 457(b) Errors New Retirement & Savings Initiatives How to Get More Information. GFOASC- 25 Years and Counting.

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Riding Out the Storm- 403(b) & 457(b) Retirement Plan Issue

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  1. Riding Out the Storm- 403(b) & 457(b) Retirement Plan Issue

  2. Presentation Overview • Public School 403(b) Plan Document Requirements • Common 403(b) & 457(b) Errors • New Retirement & Savings Initiatives • How to Get More Information

  3. GFOASC- 25 Years and Counting • Apple Computer Releases the Mac • Michael Jackson’s Hair Caught Fire • First Infomercials Appear • Cosby Show Premiers • Term Cyberspace Coined • First Woman Vice Presidential Candidate

  4. Contact Information Daniel S. Gardner 216-328-2887 Daniel.S.Gardner@irs.gov

  5. The Written 403(b) Plan Req. • Originally Required 1/1/09 • Revenue Procedure 2007-71- Model Plan For Public Schools • As of 1/1/09, No IRS Pre-Approved or Determination Letter Program • Not Everyone Was Ready, So………

  6. Notice 2009-3 Issued 12/11/08 • Transition Relief- Written Plan Requirement- 2009 Calendar Year • Not a Free “Push Back” of Date Written Plan is Required By, Since………..

  7. Relief is Based on Plan Sponsor’s Actions! • Written Plan- Adopted On or Before 12/31/09 • Intend to Satisfy 403(b), Including Regulations • During 2009-Operate In Accordance With a Reasonable Interpretation of 403(b) & New Regulations • On or Before 12/31/09, Best Efforts Made to Retroactively Correct 2009 Operation To Conform With The Written Plan

  8. What are “Best Efforts” for 2009 Corrections? • Employee Plans Compliance Resolution System (EPCRS) – Rev. Proc. 2008-50 - Section 6 –General Correction Principals • Main Theme = Restoration of Benefits

  9. The Written Plan – Essential Elements • Eligibility (Non-Discrimination Rules) • Benefits • Dollar Limitations • Available Investments • Time & Form of Distributions

  10. The Written Plan – Optional Elements • Loans • Hardship Distributions • Automatic Enrollment • After Tax Roth Accounts

  11. The Written Plan – OptionalElements- continued • Elective Deferral Catch-Ups • 15 Year Plus Service • Age 50 or Older • In-Service Contract Exchanges • Transfers • Termination • 5-Year Post Severance Contribution

  12. 2009 403(b) Compliance • No Written Plan Form Failures in 2009 – Includes: • Absence of Written Plan or • Amendment of Existing Plan to Comply With Final 403(b) Regulations • 2009 IRS Focus – Operational Failures • Notice’s Transition Relief - 2009 Calendar Year Only

  13. Announcement 2009-34 • Opinion Letter & Prototype Programs • Draft Revenue Procedure • Draft Sample Plan Language • Request for Comments- June 2009 • Next – Determination Letter Program, and…………. 2009-34

  14. Announcement 2009-34 • Retroactive Remedial Amendments For Years After 2009 • 403(b) EPCRS Modifications 2009-34

  15. Most Common 403(b) Errors • Universal Availability • Excess Deferrals- Ordering Rules, Post Severance Sick & Vacation • Hardship Distributions- Self Certify • Loan Limits- Multiple Vendors

  16. 403(b) Hardship Distb. Safe Harbor • Medical Expense • Purchase Principle Residence • Post Secondary Education • Prevent Eviction • Funeral Expenses • Repair of Principle Residence

  17. Most Common 457(b) Errors • Excess Deferrals- Last 3 Years Catch Up, Post Severance Sick & Vacation • Unforeseeable Emergency Distb- Self Certify • Loan Limits- Multiple Vendors

  18. Unforeseeable Emergency • Sudden or Unexpected Illness or Accident • Loss of Property Due to Casualty • Extraordinary & Unforeseeable Circumstance Beyond Participant’s Control

  19. Unforeseeable Emergencycont. • Severe Financial Hardship-Illness or Accident • Spouse • Beneficiary • Dependent

  20. Unforeseeable Emergencycont. • Prevent Imminent Foreclosure or Eviction • Medical Expense to Include Non-Refundable Deductible • Funeral Expenses

  21. Retirement & Savings Initiatives • Automatic Enrollment • Rev. Rul. 2009-30- Demonstration of Automatic Contribution Increases • Notice 2009-65- Sample language Sponsors Can Adopt

  22. Retirement & Savings Initiatives continued • Tax Refund as Savings Bond • 2010 Simple Check of a Box • Convert Tax Refund to I Savings Bond • Future Years Purchase for Children or Grandchildren

  23. Retirement & Savings Initiatives continued • Save Unused Vacation or Similar Leave • Rev. Rul. 2009-31- Annual Contributions • As Employer Contribution • As Elective Deferral • Rev. Rul. 2009-32- Similar Contributions At Termination

  24. What’s New • Resources • Ask Bob Architect! www.irs.gov/ep

  25. How Can I Find Out More? www.irs.gov/ep

  26. Ya’ll Come Back Now Ya’ll Come Back Now

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