Regulatory Updates

IRS Provides Amendment Guidance

The IRS has released Revenue Procedure 2021-37, providing procedures for the issuance of opinion letters and the timing requirements of remedial amendment periods for Cycle 2 approvals of 403(b) plans. The guidance aligns the 403(b) pre-approval process with the 401(a) process in several ways.

  • Replaces the prototype and volume submitter programs with a single opinion letter program
  • Provides that the IRS will issue a Cumulative List of Changes identifying requirements that will be considered in reviewing plans submitted for Cycle 2
  • Creates a determination letter program using Form 5307 for limited circumstances
  • Provides details on the system of remedial amendment periods that follows the initial remedial amendment period

The submission period for on-cycle applications for Cycle 2 opinion letters starts on May 2, 2022, and ends on May 1, 2023. The deadline to adopt interim amendments for most 403(b) plans will be the end of the second calendar year following the calendar year in which the change is effective.

The IRS simultaneously issued Revenue Procedure 2021-38, whereby the interim amendment deadline for pre-approved plans qualified under IRC 401(a) will similarly be the end of the second calendar year following the calendar year in which the change is effective. Employers are no longer required to consider their tax-filing deadline in determining the date by which the interim amendment must be adopted. The new deadline is applicable to disqualifying provisions that are effective after December 31, 2020.