SECTION 3. OVERVIEW OF THE

REVENUE PROCEDURE

.01 The Service is establishing a § 403(b) prototype plan program through this revenue procedure with the intent of assisting eligible employers in complying with the written plan requirement of the 2007 regulations. For many years the Service has maintained a similar program for plans qualified under § 401(a). Based on the Service’s experience with the prototype plan program for qualified plans, it believes that the prototype program for § 403(b) plans offers most eligible employers a lower-cost way to satisfy the written plan requirement and obtain assurance from the Service that a plan meets the requirements of § 403(b) than an individual determination letter.

.02 As more fully described in section 4, a § 403(b) prototype plan is a two-part plan document intended to satisfy the requirements of § 403(b) and the 2007 regulations which a vendor or other entity (referred to as “the prototype sponsor”) provides to eligible employers that wish to adopt a written § 403(b) plan. The prototype sponsor submits the document to the Service for approval, in the form of an opinion letter issued to the sponsor by the Service, that the form of the document meets the requirements of § 403(b) and the 2007 regulations.

.03 The first part of a § 403(b) prototype plan document, called the basic plan document, contains provisions that apply to the plan of any eligible employer that uses the document to adopt a written § 403(b) plan. Under the prototype program, an eligible employer may not modify the provisions of a basic plan document. The second part of the document, called the adoption agreement, is the part of the plan document which the eligible employer completes and signs in order to establish a written plan. The adoption agreement gives the eligible employer elections and options to choose among in order to customize the particu

lar features of its plan. Thus, many eligible employers can use the same § 403(b) prototype plan document to adopt a written § 403(b) plan, with the plans differentiated by the different choices each eligible employer makes in its plan’s adoption agreement and the different investment arrangements ( i.e., annuity contracts and custodial accounts) offered under each plan. This revenue procedure does not impose any special restrictions on the types, number, or features of investment arrangements that may be offered under an eligible employer’s § 403(b) prototype plan. However, the terms of the § 403(b) prototype plan must override any inconsistent provisions of investment arrangements under the plan.

.04 Because the terms of a § 403(b) prototype plan apply to each eligible employer that adopts the plan (with variations according to the different adoption agreement elections made by each employer) and because the revenue procedure does not impose special restrictions on investment arrangements under a § 403(b) prototype plan, the terms of the prototype plan must satisfy the requirements of § 403(b) and the 2007 regulations, regardless of the employer’s choices in the adoption agreement or the terms of investment arrangements under the plan, and the Service therefore will not review the terms of any investment arrangements or documents other than the basic plan document and adoption agreement. Section 5 describes the provisions that must therefore be included in every § 403(b) prototype plan. Also see section 9 regarding the scope of an opinion letter.

.05 Some of the provisions described in section 5 that must be included in every § 403(b) prototype plan reflect requirements of the prototype program rather than requirements of law. One of those requirements is that each § 403(b) prototype plan allow the prototype sponsor to amend the § 403(b) prototype plan on behalf of each eligible employer that has adopted the plan. Under this revenue procedure, each prototype sponsor obligates itself to carry out certain duties under the procedure, among them to keep the document up to date for changes in law and to provide copies of amendments to the document to eligible employers. See section 7 for eligibility to sponsor a § 403(b) prototype plan, section 12 for opinion letter ap

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.02 As provided in section 9.02, the Service’s review of a § 403(b) prototype plan will consider only the terms of the basic plan document and adoption agreement. Accordingly, the provisions described in subsections .05 though .11 of this section 5 must be included in the basic plan document or adoption agreement of every § 403(b) prototype plan, regardless of the terms of any investment arrangements under the plan or any documents that may be incorporated by reference. This does not preclude the adoption of a § 403(b) prototype plan (including a standardized plan, as described in section 6) in cases where different investment arrangements (annuity contracts or custodial accounts) under a plan have different features or prevent the inclusion of additional provisions in the terms of the investment arrangements under the plan or documents incorporated by reference. However, the terms of the basic plan document and adoption agreement must satisfy the requirements of law and subsections .05 though .11 of this section 5 without regard to the terms of investment arrangements under the plan or any documents incorporated by reference.

.03 For example, an eligible employer’s § 403(b) prototype plan may offer both investment arrangements that permit loans and investment arrangements that do not. In this case, the basic plan document and adoption agreement, as completed by the employer, must (1) provide that participant loans are available, depending on the choice of investment arrangements, (2) include provisions reflecting the requirements of the 2007 regulations, including § 1.403(b)–6, and § 1.72(p)–1, and (3) identify the party responsible ( e.g., the employer) for coordination among the vendors to ensure compliance with the requirements and limitations on participant loans. For sample plan language that satisfies these requirements, see the Listing of Required Modifications (for § 403(b) plans) which may be downloaded from the Internet at the following address: (http://www.irs.gov/pub/irs- tege/draft_lrm_403b_prototypes.pdf) . As another example, a § 403(b) prototype plan may provide that the forms of annuity benefit available under the plan are those described in the contracts under the plan. However, the terms of the basic plan document and adoption agreement must ensure that the required minimum distributions

isfies the nondiscrimination requirements of §§ 401(a)(4) and 410(b) relating to contributions under the plan other than elective deferrals. The eligible employer will be able to request a determination letter on the nondiscrimination requirements, if desired, after the determination letter program is open. Finally, if the § 403(b) prototype plan is a governmental plan as described in § 414(d) or a “nonelecting church plan” (see section 5.05(4)), the eligible employer may generally rely on the opinion letter regardless of whether the plan is a standardized plan or a nonstandardized plan. Of course, an opinion letter may not be relied upon with respect to Title I of ERISA, although the Service may decline to issue an opinion letter on a plan that fails to satisfy a Code provision that is parallel to a provision of Part 2 of Subtitle B of Title I of ERISA. Standardized and nonstandardized plans are discussed in section 6, and reliance is discussed in section 10. Also see section 9 regarding the scope of reliance on an opinion letter.

.09 As indicated in Notice 2009–3, this revenue procedure provides a remedial amendment provision that allows eligible employers to retroactively correct defects in the form of their § 403(b) plans for certain years through the timely adoption of remedial amendments. This provision applies to eligible employers that timely adopt a § 403(b) prototype plan or that otherwise timely amend and request a determination letter for a § 403(b) plan. Plan sponsors should not draw any inferences from this provision regarding the application of § 401(b) regarding retroactive changes in plans qualified under § 401(a). See section 16.