For many years, IRS guidance on Internal Revenue Code section 403(b) plans has been a hodgepodge of regulations, exam guidelines, revenue rulings, and notices dating back to the 1960s. Several years ago, the IRS began to tackle the process of updating and consolidating most of this guidance into one unified set of regulations reflecting current law issued in proposed form in November 2004 and including guidance under the controlled group rules of section 414(c). Although there were objections and concerns to many of the major changes contained in the proposal, the general thrust was to follow section 401(k)-like rules to the extent possible. The restatement of the 403(b) rules also followed in the footsteps of similar IRS/Treasury efforts to update and consolidate other major pension regulations, including under section 457(b) (eligible deferred compensation plans), section 401(k), and section 415 limits.
This article has been posted with the permission of the American Bar Association. This article originally appeared in the ALI-ABA Business Law Course Materials Journal, April 2008. This information or any portion thereof may not be copied or disseminated in any form or by any means or downloaded or stored in an electronic database or retrieval system without the express written consent of the American Bar Association.