Revenue Ruling 2020-23 provides guidance on the distribution of an individual custodial account in kind upon termination of a section 403(b) plan.  Notice 2020-80 is related to Rev. Rul. 2020-23 and requests comments regarding the protection of annuity and spousal rights under section 205 of ERISA with respect to a terminating § 403(b) plan funded through the use of custodial accounts.

Notice 2020-80 requests comments on the application of the annuity and spousal rights provisions of section 205 of the Employee Retirement Income Security Act of 1974, P.L. 93-406, 88 Stat. 829, as amended (ERISA), in connection with a distribution of an individual custodial account (ICA) in kind from a terminating § 403(b) plan.  Although no § 403(b) plans are subject to the annuity and spousal rights provisions of §§ 401(a)(11) and 417 of the Internal Revenue Code (Code), some § 403(b) plans that are subject to ERISA (such as a plan of a non-church tax-exempt employer that provides for matching contributions) are subject to the parallel annuity and spousal rights provisions of section 205 of ERISA.  Revenue Ruling 2020-23, 2020-47 I.R.B., issued contemporaneously with this notice, provides guidance regarding termination of a § 403(b) plan that is funded through the use of § 403(b)(7) custodial accounts and distribution of an ICA in kind to a participant or beneficiary of the plan.  The revenue ruling does not, however, address the application of the annuity and spousal rights provisions under section 205 of ERISA in connection with a distribution of an ICA in kind as part of a plan termination.

Rev. Rul. 2020-23 and Notice 2020-80 will be published in 2020-47 IRB on November 16, 2020.