Plan Sponsor Quick Tips: Get Acquainted With Your Plan Documents

Today is 401kBasics’ first post of a new weekly series called “Plan Sponsor Quick Tips”. Each Monday we’ll post a new tip to assist plan sponsors in filling their fiduciary role and running their retirement plan efficiently. Your feedback or suggestions on future articles is welcome. The first article of our series is about getting acquainted with the plan documents.

Plan sponsors are faced with the fiduciary duty of running a 401k plan and will typically overlook a basic necessity, the value of the plan documents! These documents include, but are not limited to; the basic plan document, the adoption agreement form, and the summary plan description. Here are three tips pertaining to the proper usage and maintenance of these documents:

1. Review and understand the documents. Plan documents contain the provisions set forth for any plan, hence it is important to continually read and understand them to help with running a 401k plan. The answer to the majority of a plan sponsor’s questions regarding eligibility, withdrawals, contributions, compensation, loans, etc can be found in these documents. Adhering to these provisions will help avoid operational errors.

2. Have the documents on hand. Plan sponsors should have a filing system in place to retain plan documents. This makes it easy to look up plan provisions as needed. In the event of a plan audit, these documents are the first thing that you will need to furnish.

3. Keep the documents current. Plan documents are updated on a regular frequency based on IRS regulations. To remain compliant, make sure your documents are current and the Summary Plan Description is redistributed to plan participants when changes are made.

This site is for entertainment purposes only. 401kbasics and it’s authors are not financial advisors and no information found on this site should be construed as financial advice.

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1 Response to Plan Sponsor Quick Tips: Get Acquainted With Your Plan Documents

  1. Pingback: Plan Sponsor Quick Tips: Fiduciary Responsibilities Reminder! « 401kBasics

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