Pre-approved Plan Document Providers - Responsibilities and Tips


3rd Six Year Cycle Information

Pre-approved plan document providers must meet their responsibilities that include making reasonable and diligent efforts to ensure that adopting employers:

  1. complete and sign new adoption agreements and signature pages when necessary (for example, when the plan has been restated, or when the adopting employer changes adoption agreement choices),
  2. are aware of and receive all plan documents and amendments (including an IRS-approved copy of the plan, subsequent amendments and the most recent opinion letter), and
  3. timely amend their plan for law changes to remain qualified.

Additionally, Pre-approved plan providers have recordkeeping responsibilities and must give the IRS a list of their adopting employers upon request.

Tips for Pre-approved Plan Document Providers

The IRS Employee Plans Compliance Unit conducted a review of how well Pre-approved plan providers communicated with their adopting employers about compliance issues. Based on our review, we developed these 10 tips for Pre-approved plan providers to address the potential concerns that may arise as they attempt to meet their responsibilities to adopting employers.

Tip Potential Concerns
1. Encourage adopting employers to keep plan amendments and plan restatements
  • Adopting employer is merging and needs documentation
  • Adopting employer wants to terminate the plan and needs documentation
  • Adopting employer needs plan documents for a due diligence review
2. Track communications with adopting employers
  • Adopting employer says they never received the interim or discretionary amendments
  • Amendments are in binder but not signed or dated
  • Plan operational practice does not match adoption agreement or trust
3. Provide clear instructions to adopting employers
  • An interim or discretionary amendment is not signed or dated
  • Adopting employer can't locate plan documents when audited
  • Adopting employer doesn't understand what to do
4. Track the return of executed documents
  • Adopting employer says they never received the interim or discretionary amendments
  • Adopting employer can't locate their documents
5. Encourage adopting employers to do an annual plan check-up
  • Adopting employer may miss an opportunity to self-correct or voluntarily correct plan form and operational errors
  • Financially troubled adopting employer does not take action to:
    • amend the plan,
    • freeze the plan, or
    • stop minimum funding deficiencies, risking incurring excise taxes
6. Ensure adopting employers only choose approved elective plan provisions and stay within approved parameters
  • Adopting employer writes in choices that deviate from the pre-approved language in the adoption agreement
  • Adopting employer completes a fill-in provision with language that strays beyond the parameters of the pre-approved plan
  • Adopting employer crosses out plan language and adds new language
7. Keep your sponsorship records updated
  • Pre-approved provider does not secure new opinion letters when assuming sponsorship from another provider and does not inform the adopting employers of the change in sponsorship
  • Pre-approved provider does not verify if any adopting employers are using their pre-approved plan document before discontinuing or abandoning it
  • The IRS may request that Pre-approved providers provide a list of current and past adopting employers with identifying information
8. Communicate with the adopting employers
  • If adopting employer misunderstands plan rules or doesn't have contact with Pre-approved provider:
    • annual Form 5500 series return may not get filed
    • allocations may not get made
    • interim and discretionary amendments may not be executed timely
    • funding deficiencies may occur
    • administrative procedures prior to distributions may not be followed 
9. Use IRS Resources
  • Pre-approved provider is unfamiliar with changes to retirement plan laws
  • Pre-approved provider fails to take advantage of available resources
10. Use the Employee Plans Compliance Resolution System to avoid and correct plan errors
  • Plan errors go undetected until an audit
  • Pre-approved provider is unfamiliar with IRS Fix-It Guides - Common Problems, Real Solutions