(b)lines Ask the Experts – Suggested Reading for New Plan Sponsor Employee

“Since it is not crazy busy at the moment (it will be when students return in a few weeks) I was wondering if the Experts can make any suggestions as to the first document that I should read to learn as much as I need to know about my new position. Thanks!”  

Michael A. Webb, vice president, Cammack Retirement Group, answers:

Congratulations on your new job! If there is one document that the Experts would recommend that you read and understand, it would most likely be the plan document for your retirement plan (or plan documents, if there are multiple retirement plans). The plan document is basically the “rulebook” for the plan; it describes how the plan should operate. Most compliance problems associated with retirement plans result from a failure to follow the plan document, so it is critical that all individuals who work with the retirement plan understand all of the “rules” in the “rulebook” making certain that all plan document provisions are followed in actual plan operation.

We recommend that you read the plan document page-by-page, making certain that you understand all of the language in the document. If you don’t understand a certain provision, ask a colleague for assistance, since, if you do not understand the language, it is quite possible that others at the university have had the same difficulty. The document is often lengthy and complex, but the time taken to understand it will be time well spent!

One trick to reading the document: some sections may reference a section of the Internal Revenue Code, Treasury Regulations, or the Employee Retirement Income Security Act (ERISA), without explaining the meaning of this section. In this case, it is best to conduct an internet search for the applicable section, which will often provide an explanation of what that section means. Usually when you read this explanation in conjunction with the document language, the language will then make sense.

Finally, if it is a 403(b) plan document, you may wish to familiarize yourself with the 403(b) final regulations http://www.irs.gov/pub/irs-tege/td9340.pdf as well, as they will provide a great deal of assistance with reading and understanding a 403(b) plan document.

The Experts wish you the best of luck in your new position!