403(b) Regs Will Be Delayed
I have it on good authority (Source at the IRS) that the 403(b) proposed regs that were supposed to be released and finalized tomorrow (June 30th) will be delayed till the fall. In addition, the effective date of the regs will be delayed by at least a year as well. When the proposed regulations become finalized they won't be effective until January 1st, 2008 (they were due to become effective January 1st, 2007).
It appears the hold up is an issue between the IRS and Department of Labor that might subject non-government non-profit voluntary only plans to ERISA. The IRS apparently doesn't want this to happen and is working with DOL to ensure this doesn't happen. Governmental plans will still not be subject to ERISA.
In addition, it seems that there will not be any significant changes (from the proposed regs) in the final regulations as they relate to governmental 403(b) plans.
I'll keep you posted as to further developments, but it looks like the proposed regs won't become final until either before or shortly after the elections.
Scott Dauenhauer, CFP, MSFP
Co-Author of The 403(b)Wise Guide