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Ensure your plan stays in compliance with the IRS. 

There are numerous benefits when you offer a 403(b) plan to your employees.  However, along with those benefits come various requirements that must be met to ensure your plan stays in compliance with the IRS.  One of those requirements is called universal availability.

What is Universal Availability?

The IRS requires that all employees who have the right to make elective deferrals to a 403(b) plan must be offered the ability to do so. The rule states that if any employee is permitted to make elective salary deferrals, then all employees, with limited exclusions, must have the same opportunity to participate in that plan.  The IRS also requires that employers notify all eligible employees annually of their right to participate in the plan. Employee eligibility notification can be done in written or electronic form, but orally does not meet the requirement.  These requirements are known as the “universal availability” rule. 

The IRS may audit a plan at any time in an ongoing attempt to ensure that 403(b) Plans are in compliance with the universal availability rule.  No matter how you administer your plan – whether inhouse or with assistance from your TPA – it’s important to make sure you comply with the universal availability requirements of IRC 403(b)(12) (A)(ii).  Compliance problems are best avoided altogether and, if encountered, easier and cheaper to fix when they’re small and caught early.

What to do if you receive an IRS inquiry?

Any inquiry should be brought to the attention of the person that is responsible for the day-to-day administration of your employee benefit program and 403(b) plan.  If you have a department that is responsible for sorting and routing the mail, it is crucial they are aware of the importance of delivering correspondence from the IRS directly and promptly to the appropriate department.  The details of the inquiry will be spelled out and it is imperative you respond in a timely fashion.  It may be wise to also consult with your district’s tax advisor and/or attorney for assistance in providing the information requested by the IRS.

National Life Can Help! 

We have a wide range of resources that provide not only valuable information about the universal availability requirement but also provide a range of educational tools for both you the plan sponsor and your employees.  We also have locally trained Agents who are happy to partner with you to notify employees about the 403(b) plan as another way to meet the universal availability requirement. 

If you would like more information, please visit our Plan Sponsor Resource Center or Nationallife.com.

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