IRS Releases Final 403(b) Regulations
MORE THAN 40 years after the release of the first 403(b) regula-tions, the 403(b) plan industry now has an up-to-date body of regulations for clearer guidance. Because the final regulations will affect every existing 403(b) plan in some way, the IRS has given 403(b) plan administrators and plan providers until Dec. 31, 2008 to prepare for changes.
The new regulations diminish the extent to which 403(b) arrangements differ from 401(k)s and 457(b) plans. As a result, several major changes will take effect, including modifications to ERISA, the Tax Reform Act of 1986, the Small Business Job Protection Act of 1996, the Economic Growth and Tax Relief Reconciliation Act of 2001, and the Pension Protection Act of 2006.
For the first time, it is confirmed that an employer may terminate a 403(b) plan at any time for replacement with a 401(k) or 457(b) plan. Roth contributions may be made to a 403(b) plan.
Pension Penalty: Diversify or Else!
THE DEPARTMENT of Labor can fine companies up to $100/day if they do not notify workers of their right to diversify company-sponsored retirement plans beginning October 9. This includes notifying workers they can divest the company’s own stock given by their employers as a 401(k) plan matching contribution and reinvest the proceeds into other investment options offered by their plans. To comply with the rule, plan administrators have 30 days to notify employees of their rights before they become eligible for the plan.
Congress May Expand FMLA
DESPITE RESISTANCE from business groups, the Democratic-led Congress appears to be growing sympathetic to the idea of providing workers more time off to tend to their families. Before leaving Washington for its August recess, the Senate approved a plan that would allow the relatives of wounded soldiers to take up to 26 weeks of unpaid leave to care for them. If approved by the full Congress, it would mark the first expansion of the landmark Family and Medical Leave Act since it took effect in August 1993.
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