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Are Your Plan Documents in Shape?

Would your plan sponsor clients like to know what the IRS looks for in plan documents? Here’s a list.

Specifically, the Internal Revenue Service recently published a bundle of subject matter packages that their Employee Plans Specialists use when reviewing retirement plan documents. The IRS notes that plan sponsors can also use these packages as a review tool before submitting a determination letter application to the IRS.

Each subject matter is packaged as a publication and two forms, though not all packages are relevant to all plans. Each package contains:
• An explanation that provides guidance in the law and legal citations.
• Worksheets you can use to review retirement plans. Generally, an affirmative answer to a question indicates that a plan is in compliance with applicable law.
• Checksheets providing pre-approved wording that will satisfy the applicable Internal Revenue Code requirements. Although you aren’t required to use this exact wording, the pre-approved language provides an easy and reliable method for assuring plan qualification.

In prior years, these three items were available as separate documents, but now they have been bundled into one package for convenience.

Specific topics of focus include:
• Minimum participation standards
• Minimum vesting standards for DB and DC plans
• Joint and survivor annuities
• Coverage and nondiscrimination requirements for DB and DC plans
• Permitted disparity
• Limitations on contributions and benefits
• Top-heavy requirements
• Required plan distributions
• Affiliated service groups
• Employee and matching contributions
• Section 401(k) requirements

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