Severance of Employment – What Does it Really Mean?

Editor's Note: The corresponding MarketBeat article has been removed.

The IRS took the industry by surprise with the definition of severance of employment (specifically for public school districts) contained in the Listing of Required Modifications (LRMs) posted in March 2013 to provide guidance on the preparation of plan documents for the IRS 403(b) pre-approval program. 

Contrary to long-established practice defining the employer as the public school district which hires/fires and sets working conditions for its employees, the LRMs defined the employer as the state in which school employees work. In this week’s MarketBeat, Ellie Lowder discusses the issues this new position raises.