Universal Availability Notices for 403(b) Plans

The Universal Availability rule requires that if a 403(b) plan permits any employee to make salary deferrals to the plan, it must offer the same opportunity to all employees (with limited exclusions).  If an organization has failed to comply with this rule, it can self-correct by giving each eligible employee the opportunity to participate.  The organization must also make employer contributions to restore improperly excluded eligible employees’ lost opportunity to make salary deferrals.  Failure by an organization to correct such error could result in loss of favorable tax benefits for the plan and the employees.

This is a reminder that if you wish to maintain a record of compliance with the Universal Availability rule, you should customize the attached sample based on your plan’s requirements and distribute to all eligible employees.  While there is no guidance in the IRS regulations regarding when to provide this notice, we recommend that you provide it to current employees annually, and you should also retain a copy in your new hire enrollment kit for new employees who are eligible to participate.  If you wish to have us customize the document for you, please let us know and we would be happy to assist you with it.         

Click Here for a Word version of the Universal Availablity Notice

Founded in the 1950s, Carroll Consultants, Ltd. has experienced professionals with a wealth of knowledge about retirement plans. If you have any questions about this article or our services, please contact Marcie Carroll, at mcarroll@cclbenefits.com, or (610) 225-1210.