IRS Issues Announcements Regarding 403(b) Pre-Approved Plan Opinion Letter Program

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November 29, 2024

TO: ICI Members
Pension Committee
Pension Operations Advisory Committee SUBJECTS: Pension
Tax RE: IRS Issues Announcements Regarding 403(b) Pre-Approved Plan Opinion Letter Program

 

On November 22, 2024, the IRS issued Announcement 2024-38, providing information regarding the 403(b) pre-approved plan opinion letter program.[1] In 2021, the IRS announced the opening of the second 403(b) pre-approved plan cycle, with applications for opinion letters accepted from May 2, 2022 through May 1, 2023.[2] The new Announcement provides information regarding this cycle, including IRS's intention to issue opinion letters and the deadline for employers to adopt a pre-approved plan.

Announcement 2024-38 includes the following information:

• IRS intends to issue opinion letters for 403(b) pre-approved plans for the second cycle on November 29, 2024, or as soon as possible thereafter. (Section 1)
• An employer intending to maintain a 403(b) pre-approved plan for the second cycle must adopt that pre-approved plan on or before December 31, 2026. (Section 3)
• An adopting employer of a second cycle 403(b) pre-approved plan may file for an individual determination letter (if otherwise eligible) between January 1, 2025 and December 31, 2026. (Section 4)
• IRS will issue guidance clarifying that the restatement rule in Rev. Proc. 2019-39 and Rev. Proc. 2016-37 continues to apply to all pre-approved plans, including the second cycle (and future) 403(b) pre-approved plans and the fourth cycle (and future) qualified pre-approved plans (the existing restatement rule does not specifically address its application to future pre-approved plans). (Section 5)
• IRS reminds adopting employers that a 403(b)(9) retirement income account must either be established or maintained by a church, or a convention or association of churches, including an organization described in § 414(e)(3)(A). (Section 6)

 

Shannon Salinas
Associate General Counsel - Retirement Policy

Notes

[1] IRS Announcement 2024-38 is available at https://www.irs.gov/pub/irs-drop/a-24-38.pdf.

[2] For a summary of Rev. Proc. 2021-37, which announced the opening of the second cycle, see ICI Memorandum No. 33780, dated September 21, 2021, available at https://www.ici.org/memo33780.  In Rev. Proc. 2023-37, IRS updated the procedures for pre-approved 403(b) plans. See ICI Memorandum No. 35514, dated November 27, 2023, available at https://www.ici.org/memo35514.