Correcting Employer Eligibility Failures in 403(b) Arrangements

The IRS has reminded sponsors of Section 403(b) arrangements how to correct failures resulting from the ineligibility of the plan sponsor.

Document Excerpt

If a retirement plan was intended to satisfy the requirements of Code §403(b) but was adopted or operated by a plan sponsor that is not a tax-exempt organization described in Code §501(c)(3) or an educational organization described in Code §170(b)(1)(A)(ii), the plan may have an “eligibility failure”. The failure can, however, be corrected using the Employee Plans Compliance Resolution System under the Voluntary Correction Program (VCP) as stated in Revenue Procedure 2008-50.

Link http://www.irs.gov/retirement/article/0,,id=235818,00.html

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