Final 403(b) Regulations Released

On July 26, 2007, the Treasury Department released final comprehensive regulations governing tax-sheltered 403(b) programs, which cover employees of public schools, churches and certain tax-exempt organizations. The new regulations represent a wake up call to sponsors of 403(b) plans that have for decades enjoyed loose regulation and tax enforcement. Sponsors of 403(b) plans beware—those days are coming to an end. For the first time, each and every 403(b) sponsor must set forth the material terms of its tax annuity program in writing, and will be held accountable for enforcing such terms, even if the 403(b) arrangement encompasses multiple vendors.