What is a Plan Document?

Understanding Plan Documents

Employer sponsored retirement plans, to include 401(k) plans and 403(b) plans, generally include a written plan document requirement. In other words, the plan must be in writing. Without an up-to-date Plan Document, the plan is non-compliant. In the event of an IRS audit of the plan, the plan could be disqualified if it does not include an up-to-date Plan Document.

The Plan Document represents the legal description of the retirement plan. It is typically made up of three components; the Plan Document, the Adoption Agreement and the Summary Plan Description:

  1. The Plan Document assures that the plan in form conforms to all of the applicable legislation to include the Internal Revenue Code and, if the plan is subject to ERISA, the Department of Labor Code.
  2. The Adoption Agreement details those plan design elements that are specific to the organization’s plan. For example, when does an employee become eligible to participate in the plan?
  3. The Summary Plan Description (SPD) describes the plan in layman’s terms and is meant to be a handout to plan Participants and their beneficiaries.