Updated IRS form for ensuring tax benefits of these retirement plans

IRS has updated Form 5300, and that’s good news for sponsors of retirement plans wanting to ensure their plans’ tax benefits.

First, in Revenue Procedure 2022-40, released in November 2022, IRS expanded its determination letter program.

Prior to that, only sponsors of individually designed plans offered under Internal Revenue Code 401(a) could ask IRS to confirm that a plan met the requirements for being tax-advantaged. That included 401(k) plans, for example, but not 403(b) plans.

The revenue procedure opened the door for individually designed 403(b) plans as well.

Such plans may be offered by:

• certain public schools
• churches, and
• charities.

More recently – in January 2023 – IRS issued Revenue Procedure 2023-4, to provide a general update to the 2022 revenue procedure. One example of what’s new: You’ll find a sample notice for interested parties. Bear in mind, notices must be provided at least 10 days, and not more than 24 days, prior to the day an application is submitted to IRS.

Finding out about retirement plans

In light of the expansion to the determination letter program, IRS made changes to Form 5300, Application for Determination for Employee Benefit Plan. The instructions for the form were revised in June 2023.

Form 5300 is used for initial determination. Sponsors of existing 403(b) retirement plans haven’t had the chance to ask for an initial determination until now, so they may be anxious to do so.

But for some sponsors, there will be a wait.

That’s because IRS is phasing in its acceptance of the form based on employer identification number (EIN).

• IRS started accepting applications from 403(b) plan sponsors with EINs ending in 1, 2 or 3 on June 1, 2023.
• For EINs with a last digit of 4, 5, 6 or 7, the start date is June 1, 2024.
• Finally, EINs that end in 8, 9 or 0 will be accepted beginning June 1, 2025.

You don’t have to worry about any cut-off dates.

Another form included in the determination letter program for individually designed retirement plans is Form 5310, Application for Determination Upon Termination. The instructions for this form were revised in May 2023.

Both the 5300 and 5310 must be submitted electronically. That’s done through www.pay.gov, IRS reminded plan sponsors in its 2023 revenue procedure.