What Plan Documents Should You Be Keeping?

By Jeff Chang

Despite the insane popularity of Marie Kondo and her tidying methodology, when it comes to your agency’s retirement (and welfare) plan documents: more is better. But, not just more of the same thing — such as unexecuted plan documents. Your plan documents tell a story and must be collected and kept together like an invaluable manuscript. Here are a few best practices for plan document retention and organization:

  • Never rely on your recordkeeper or third-party administrator (TPA) to maintain or keep track of your plan document. Time and time again, we see situations where the recordkeeper/TPA has nothing more than the unsigned plan documents and amendments that were sent to the client to be executed, but not the documents that were signed. Maintenance of appropriate and complete (and executed) plan records is up to the sponsor or the named plan administrator. Click here if you don’t know who the “plan administrator” is.
  • Tax attorneys, auditors and the IRS care more about “signed” plan documents. Generally speaking, we are looking for a trail of signed plan documents starting with the original plan, each of its amendments, any original plan restatements, amendments to subsequent restatements and so on. This leaves you with something akin to a chapter book – with each chapter adopted and “signed-off.” Failure to maintain executed copies of all plan documents can give rise to questions of whether your agency administered (was following) the right plan language. For example, if your last “signed” plan documents were from 15 years ago, you should have been following the terms of those rather than the set of more of more recent documents your agency never approved or signed.
  • In some cases, agencies use pre-approved, or “off-the-shelf,” plan documents that include an adoption agreement and a separate basic plan document. Whenever you amend or restate one of these plans, retain and file the appropriate basic plan document along with the adoption agreement that was just changed. If you are not sure you are matching an adoption agreement with the correct basic plan document, your document provider should be able to help you.
  • Keep copies of all board resolutions authorizing a plan’s adoption or amendment, fiduciary committee appointment, plan policy establishment (e.g., an investment policy) or new or changed rate of contribution designation.
  • Keep signed copies of all your plan service agreements, along with any and all subsequent changes. At a minimum, you should have an administrative service agreement with your recordkeeper, a trust agreement (unless part of the plan document), an investment advisory agreement and, in some cases, a variable annuity contract for your stable value fund.
  • Keep copies, in appropriate chronological order, of all plan summaries, summary updates and significant participant notices (e.g., blackout notices). In a future blog post, we will address what participant-level records should be maintained.

Finally, what do we mean by “keep?” The simple answer is “keep forever.” Why? Issues of plan tax-qualification can go back to the inception of a plan, even if it is decades old. Further, we have seen numerous instances of plan benefit claims that are dependent on plan records going back 10-20 years! As a plan sponsor or administrator, you are at a huge disadvantage dealing with a claimant if you do not have the plan documents that applied when the person retired.

Jeff Chang is a partner at Best Best & Krieger LLP. He has four decades of experience skillfully evaluating benefit and retirement plan compliance to achieve maximum outcomes for public agency clients throughout California. He can be reached at jeff.chang@bbklaw.com or (916) 329-3685.

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