The DOL continues with its sensitivity to the challenges created for 403(b) plan sponsors in the transition to an employer accountable world. In today’s release of the final 408(b)(2) regs, the DOL provided tremendously needed relief for 403(b)plans. The language from the preamble speaks for itself:

The Department was persuaded by commenters on the interim final rule to exclude all or that part of a Code section 403(b) plan (hereafter “403(b) plan”) that consists exclusively of “frozen” contracts or accounts, as described in the Department’s Field Assistance Bulletins addressing the limited application of the annual reporting requirements to such contracts or accounts.  Plan sponsors and fiduciaries likely would be unable to comply with this rule because they often have no dealings with the relevant plan service providers and are unable to obtain information about these contracts and accounts.  Accordingly, paragraph (c)(1)(ii) of the final rule now provides that, in the case of a Code section 403(b) plan subject to Title I of ERISA, the “covered plan” would not include annuity contracts and custodial accounts described in section 403(b) of the Code with respect to which the plan sponsor ceased to have any obligation to make contributions (including employee salary reduction contributions) and in fact ceased making contributions to such contracts or accounts for periods before January 1, 2009.  Further, the contract or account has to have been issued to a current or former employee before January 1, 2009; all the rights and benefits under the contract or account have to be legally enforceable against the insurer or custodian by the individual owner of the contract or account without any involvement by the employer; and such individual owner has to be fully vested in the contract or account. 
As with everything 403(b), there are going to be complications, as it is not a totally carte blanche of pre-2009 "frozen" contracts. There will be odd circumstances, like where  vendors who insist on employer approval on loans and distributions from those contracts (but the price of that insistence will be 408b2 disclosure).
The real value of this new DOL position will be as the "flushing" of old 403(b) contracts begins-and we have, indeed, seen it begin.  Plan sponsors will be able to manage vendors effort at these disclosures as long as they take the steps to make it clear that they are not exercising authority over these contracts. It also closes the loop on the past FABs which initially granted reporting relief only.