Share This Article


403(b) Regulations Delayed Until At Least 2008

Many of you have contacted us to ask whether the IRS has made any further announcements about the new 403(b) regulations that were proposed in November 2004. While we finally do have something to report, it is only that the IRS made a formal announcement on Tuesday stating that, when issued, the regulations will not generally be effective before January 1, 2008. This is certainly good news for many school districts.

The proposed regulations that the IRS published in 2004 would require that every school district make significant changes to their 403(b) programs. Rather than overreact, Davis & Kuelthau, s.c. has consistently recommended that its clients take a more measured response. In our original Client Alert regarding the proposed regulations, we urged employers to learn about the proposed regulations, to make sure that their current 403(b) programs were well-run and to wait before making extensive changes that may or may not be required under the final regulations. While several other advisors have encouraged school districts to implement extensive changes, our advice to wait for further clarification has not changed.

Employers should still educate themselves about the proposed regulations and carefully review their existing 403(b) programs. The possible addition of a Roth contribution feature is one change that some school districts may want to adopt before the 403(b) regulations are finalized.

If you are interested, a copy of our original Client Alert published in March 2005 immediately follows on page 2.

The Wisconsin Association of School District Administrators (WASDA) also has a copy of our seminar concerning the proposed regulations available through its on-line video library.

Davis & Kuelthau, s.c. is committed to providing the best possible services to all of our school district clients. You can count on us to continue to monitor IRS developments and to provide a variety of practical educational material as soon as further developments warrant.

For more information, please contact your Davis & Kuelthau attorney or a member of our Labor & Employment Team.