What Goes into your Fiduciary File? Legal Plan Documents

Retirement plans are designed to be long-term programs for participants to accumulate and receive benefits at retirement. As a result, plan records may cover many years of transactions. The Internal Revenue Service (IRS), as well as the Employee Retirement Income Security Act (ERISA), require plan sponsors to keep records of these transactions because they may become material in administering pension law. “ERISA Section 107 requires that fiduciary plan documents, contracts and agreements, participant notices, and compliance documents are required to be kept for at least six years from the date the report was filed.”  The IRS says, “You should keep retirement plan records until the trust or IRA has paid all benefits and enough time has passed that the plan won’t be audited.”  

Considering that the Department of Labor (DOL), IRS, participant or participant’s legal counsel could come calling at any time, you’ll want to be ready to show your ERISA required documented prudent process.  

A Fiduciary File is just that. A file, or more likely a digital folder that holds all the relevant plan related documents and governance related files that define roles, set criteria, document benefits, and demonstrate procedural prudence. Broadly, these fall in to five categories:

  1. Legal Plan Documents
  2. Service Provider Contracts & Communications
  3. Fiduciary Committee Governance
  4. Regulatory Compliance and Filings
  5. Participant Related Documents 

Over the course of several blog posts throughout the coming weeks, we will break down each of the five categories. Our first category is legal plan documents.

ERISA Section 402 provides that every employee benefit plan should be established and maintained pursuant to a written instrument. This written instrument is your legal plan document which governs the operations of the plan. There are two types of plan documents: 

  1. Individually designed documents are often drafted by an attorney and are usually a single document with all of the provisions and definitions necessary for the operation of the plan. If you have an individually designed plan document, you should also retain the IRS opinion letter for your document. 
  2. Pre-approved plan documents, often called Volume-Submitter plan documents, are usually provided by a recordkeeper or third-party administrator and are made up of a base plan document with definitions important to the plan and an adoption agreement, which often contains check boxes allowing a plan sponsor to choose between allowable provisions for the plan. Plan sponsors should retain the base document, adoption agreement, and confirmation of IRS approval. 

Along with the original source document, you should also store: 

  • Plan amendments will be made throughout the life span of a plan, either through changes in plan design or through required regulations. Each signed and dated plan amendment should also be retained.
  • Summary Plan Descriptions (SPDs) are documents that summarize, in plain language, the provisions of the plan and are required to be given to eligible employees. These are often drafted by the document provider and should be retained.
  • Summaries of Material Modification serve as amendments to the SPD and are required whenever a plan amendment is made unless a new SPD is drafted. 
  • IRS Plan Document Approval Letter, is just that. A letter from the IRS that says your document, either individually designed or pre-approved, has been reviewed to ensure the document meets the letter of the code and is approved by the IRS.

For a short guide on all five categories, download our "Fiduciary File: What Is It and What Do You Keep In It?" resource.

Multnomah Group is a registered investment adviser, registered with the Securities and Exchange Commission. Any information contained herein or on Multnomah Group’s website is provided for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any specific securities, investments, or investment strategies. Investments involve risk and, unless otherwise stated, are not guaranteed. Multnomah Group does not provide legal or tax advice.

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