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Hi, I'm Monika Templeman.

403(b) plans are an important retirement-savings program for employees of many tax-exempt organizations and educational institutions.

It's very important to keep your 403(b) plan in compliance with the law to preserve the tax deductions for contributions and allow participant accounts to grow tax-deferred.

In our experience of auditing 403(b) plans, we find a universal availability failure in the majority of plans.

Universal availability means that if you permit one employee to defer salary into your 403(b) plan, you must offer it to all your employees.

It's always prudent to err on the side of caution and inclusion, because a single universal availability failure can jeopardize your entire 403(b) plan.

If you still decide you don't want to allow all employees to participate in your 403(b) plan, your document may be written to exclude certain employees. For example, you may exclude those employees that are eligible to defer under another plan, such as a 457(b) governmental,  or 401(k) plan or another 403(b) plan that you sponsor.

Work-study students and non-resident aliens with no U.S. source income can also be excluded from the plan.

You can also exclude employees with a normal workweek less than 20 hours, if as of the employee's date of hire, you expect them to work fewer than 1,000 hours in their first 12 months of employment and for each subsequent year, the employee actually works fewer than 1,000 hours. Again, I caution you, when excluding employees expected to work less than 1,000 hours, be careful, because if the employee actually works more than 1,000 hours, you have a universal availability failure.

You can condition an employee's right to make deferrals by requiring them to defer more than $200 each year.

You cannot exclude employees based solely on job classification, such as nurses, visiting professors, school bus drivers or substitute teachers.

For example, you cannot just exclude all nurses from participating in the 403(b) plan. But you may exclude all nurses from the 403(b) plan by placing them in a 457(b) plan sponsored by the employer, assuming the plan document is written with that exclusion. Remember, 403(b) plans are now required to have a written plan document that incorporates the terms of the plan.

A universal availability failure exists if you excluded an employee from the plan that you should have included in the plan, or if you have an employee in the plan that you should have excluded. It only takes one.

It's important to conduct self-audits to ensure that you're not violating universal availability rules. Review the reasons you excluded any employees from your plan. If you determine that individuals, or groups of individuals, were improperly excluded, because either you didn't follow your plan document or the document didn't comply with the Internal Revenue Code, you should correct the error as soon as possible.

The sooner you find and correct a mistake, the more time and money your organization can save. Finding and correcting an error early could allow you to use the IRS Self-Correction Program, which has no IRS involvement, no fees and takes less time to correct than if the mistake continues for years.

If you prefer to have the IRS approve your correction, you may use the Voluntary Correction Program, which includes a fee.

You may correct a universal availability mistake found during an IRS examination using the Audit Closing Agreement Program, where you'll pay a negotiated sanction to the U.S. Treasury.

All three correction programs require you to correct universal availability mistakes by restoring benefits to employees for the lost opportunity of tax deferred savings. You can find approved methods of correction in the Employee Plans Compliance Resolution System, or EPCRS, revenue procedure, which we've posted on our website at Search for "Correcting Plan Errors."

Our website also has tools to assist your organization with self-audits and improving your internal controls.

Our 403(b) Checklist is a "quick tool" to help you with your annual self-audit. It lists the top 403(b) errors – including universal availability.

The 403(b) Frequently Asked Questions page addresses universal availability issues.

Soon, we'll post a new 403(b) Fix-It Guide, which provides tips on how to find, fix, and avoid universal availability and other 403(b) errors to help you keep your plan running smoothly. For more information, visit us on the Web at