Employers sponsoring 403(b) plans should take steps now to ensure compliance with Internal Revenue Service rules to protect plan participants against adverse tax consequences. Newly released Rev. Proc. 2017-18 allows employers to retroactively self-correct 403(b) plan document failures during a correction period called the "remedial amendment period." This RAP begins for plans that were established after January 1, 2010 and ends March 31, 2020.
Prior to the March 31, 2020 deadline, employers should conduct a thorough review of their 403(b) plans both in written form and in actual operation to identify and correct any failures. Failures that are not timely corrected could result in the 403(b) plan's loss of tax-advantaged status, which would mean immediate taxation of all benefits to participants.
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