Plan Document Design
It is critical for businesses to thoroughly research and document benefit plans and to conduct annual reviews to ensure all plans meet applicable laws and satisfy tax codes. Audits verify documents contain necessary terms and provisions, and that all required amendments have been timely and properly adopted.
Many plans operate under a prototype or volume submitter document. Prototype plans and some volume submitter plans consist of an adoption agreement and a separate basic plan document. Adoption agreements reflect provisions such as eligibility requirements, the types and amounts of contributions allowed, the allocation method for employer contributions, the vesting schedule applicable to employer contributions and the distribution options. Adoption agreements are not complete benefit plans and must be accompanied by basic plan documents, which provide in-depth details of how plans should operate. Summary plan descriptions are separate documents provided to employees that explain key features of plans.
Employers should make sure they update plan documents, which should be organized so they can be located quickly and reviewed and revised when necessary.
