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The New 403(b) Regulations

Impact on church retirement.

Impact on church retirement

Article summary. The IRS issued final regulations in 2007 that address the legal requirements that apply to 403(b) retirement plans. The regulations were enacted because of IRS concern over the massive noncompliance it was observing in field audits of 403(b) plans. The IRS has endeavored to address these concerns, in the final regulations, by making 403(b) plans more like 401(k) plans. One immediate effect will be an increase in the administrative responsibilities of employers that offer 403(b) plans. Whether the regulations ultimately will achieve their purpose remains to be seen. This article has three objectives: review those provisions in the final regulations of most relevance to churches; address what church leaders need to do in order for their 403(b) plan to be in compliance with the final regulations; and, illustrate the application of the final regulations ...

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Richard R. Hammar is an attorney, CPA and author specializing in legal and tax issues for churches and clergy.

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  • November 3, 2008

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