Certain plans, such as those for churches, certain governments, collective bargaining plans and for limited universal availability exclusions may have delayed effective dates for the new regulations.

Effective January 1, 2009, a plan sponsor/employer is now required to maintain a written 403(b) plan document. Plan documents should include information related to the form and operation of the plan, eligibility requirements, investment options/limits, contribution and distribution policies, and loan provisions among other topics. The plan document may include references to other related documents, such as insurance policies and related accounts, but a single document is required for each plan. The most pressing matter to remember is the date, which is fast approaching. To reemphasize, even for plans that do not use a calendar-basis year, the plan document must be adopted by the January 1, 2009 date.

The 403(b) plan is defined by the regulations as a" written defined contribution plan, which, in both form and operation" satisfy the requirements of the new regulations. The requirements note that the 403(b) contract does not satisfy the regulations if it is not maintained in accordance with the plan document specifications. Thus, adopting a plan document and then not strictly adhering to its terms may disqualify the entire plan. The employer, investment professional providing services under the plan and any other related third parties assisting the plan must adhere to the terms of the plan.

Other major changes under the new 403(b) requirements include the following:

New Form 5500 Reporting Requirements

403(b) plans (with certain exceptions such as church plans and other ERISA-exempt plans) will now be subject to expanded reporting requirements (including financial statement reporting) on their Form 5500.

For those plans with more than 100 participants (and participant counts must now be maintained) will be subject to the same independent audit requirements as other plans.

The Form 5500 must be filed electronically starting January 1, 2009.

New Invesment Information Sharing Requirements

As required by Treasury Regulation Section 1.403(b)-10(b), the employer plan sponsor and service providers (for example, investment managers, etc.) must share information to ensure the plan's compliance with the requirements of the IRC and final regulations. Examples of the type of information that should be shared include participant's eligibility for hardship distributions/loans and employment status, etc. Thus service providers to the plan will no longer be able to simply rely on communication with the participant.

The effective date for the new information sharing requirement (for accounts/contracts that receive amounts from another account/contract after September 24, 2007) will be subject to the new exchange requirements as of January 1, 2009. It should be noted that if the effective date is not met, the 403(b) status may be in jeopardy. The end result could be that the employee/participant account will become income taxable, including those with multiple contracts. Moreover, if the employee falls below the age of 59 ½ as of the January 1, 2008 effective date, the value of the employee's contract(s) may be subject to the 10% Federal early withdrawal penalty.

A Final Note...Early Response

Except for particular restrictions related to collective bargaining plans, employer plan sponsors may opt to comply with the new 403(b) requirements prior to the effective date(s). Given the need for a written plan document, the complexities of revised Form 5500 reporting and the coordinated task of creating information sharing agreements with all providers to a plan, early compliance with the new regulations seems like the best choice for the 403(b) plan sponsor to enter 2009 ahead of the curve.