In July 2007, the Internal Revenue Service (IRS) issued final regulations (the "Final Regulations") under §403(b) of the Internal Revenue Code of 1986, as amended (the Code), which generally took effect for taxable years beginning after December 31, 2008. The Final Regulations required significant changes to the rules that apply to tax-exempt organizations, public schools and churches that maintain tax-deferred retirement plans under Code §403(b) (referred to herein as "403(b) plans"), and in most instances, required employers to amend and update their 403(b) plans and consider modifications to their related administrative practices. Among a long list of new rules and requirements that the Final Regulations brought to the 403(b) arena was a definitive provision permitting 403(b) plans to be formally terminated and terminal distributions made from such plans.
To continue reading, please click the linked article above.