If you sponsor a 403(b) retirement plan - which might be the case if you are a 501(c)(3) organization or a governmental educational agency - you are required to maintain a written plan document for the plan. This hasn't always been the law, however. The plan-document requirement began in 2009 when the current 403(b) regulations went into effect.
Some plans have yet to come into compliance with this rule. In most cases this is not due to willful disregard of the law. Rather, plan sponsors may not understand the requirement or - more likely - they may think they have a plan document, because they have entered into an annuity contract or custodial agreement with the investment provider for the plan. But that contract typically will not satisfy all the requirements of a plan document.
Well, if you happen to sponsor a 403(b) plan that hasn't yet fully complied with the plan-document requirement, the IRS has a deal for you. Under a recently released update to its Employee Plans Compliance Resolution System or "EPCRS" (see here), the IRS has outlined a specific procedure for correcting this problem. It requires filing an application with the IRS and paying a fee. But the relief and peace of mind it provides is nearly priceless.
And there's even better news: If you file your application to correct this problem by December 31, 2013, the required fee is half of what it would be normally. For example, a plan with 51 to 100 participants would typically pay a fee of $2,500 to use this program, but under this special rule, it would pay only $1,250.
So what's the catch? The ability to file under this program is lost if the IRS opens an audit of the plan or the employer. So you can't just wait and see if something bad is going to happen before taking steps to fix the problem. You have to be proactive about identifying the problem and accessing the IRS's correction program.