ICI Submits Additional Comments to the DOL on 403(b) Plan Issues

Washington, DC, March 17, 2009 - ICI has offered suggestions to the Department of Labor regarding potential transition relief for 403(b) plans.

Background

In 2007, the Internal Revenue Service (IRS) released a comprehensive rewrite of the regulations governing 403(b) plans. The Department of Labor (DOL) separately published related regulations and revisions to its annual reporting requirements for the 403(b) plans that are covered under ERISA (such as certain plans of private charities), requiring more complete reporting. These new reporting obligations are reflected on Form 5500, the annual report to be filed with the DOL for any employee benefit plan subject to ERISA.

Historically, many 403(b) plans were a collection of individual contracts between employees and investment providers, with employers playing limited roles in the plans. Absent further guidance, the new reporting obligations would require employers to obtain financial information about contracts which they were not originally a part of, making compliance difficult and expensive.

In a letter submitted to DOL in November 2008, ICI asked for transition relief from annual reporting and other ERISA requirements, given the extensive changes to the operation of 403(b) plans resulting from new IRS and DOL rules. ICI recommended that contracts held by vendors that are no longer authorized to receive contributions under a plan after January 1, 2009, should not be considered ERISA plan assets if the employer or other plan fiduciary does not retain any material rights under the terms of the contracts. In a follow-up letter ICI provided additional suggestions regarding the requested relief.