What is a Base Plan Document for Preapproved 403(b) Plans?

Q: We are a 403(b) plan sponsor with a preapproved plan document. Upon sending our adoption agreement to our adviser, the adviser indicated that he needed something called a “base plan document” as well. Do the Experts know what that is?

Kimberly Boberg, Kelly Geloneck, Emily Gerard and David Levine, with Groom Law Group, and Michael A. Webb, senior financial adviser at CAPTRUST, answer:

A: Absolutely! Plan sponsors with preapproved plan documents are often under the mistaken impression that their adoption agreement, which customizes certain plan terms to their particular situation and also enables them to adopt the preapproved plan, is their sole “plan document.”

However, the adoption agreement contains terms specific to the employer’s plan and actually adopts a plan. The base plan document is usually a separate, generic document that contains standard terms applicable to all plan sponsors utilizing that particular preapproved plan. You can usually discern this by reading the first page of the adoption agreement, where it will state that the adoption agreement is being used to formally adopt the plan, whose base plan document is usually referred to by a number, such as “Base Plan Document #01.”

The base plan document is far longer than the adoption agreement. It explains important provisions and defines important terms that the plan sponsor generally cannot change. Thus, it is critical that the plan sponsor administers its plan in accordance with the provisions of not just the adoption agreement, but the base plan document as well. This is likely why your adviser asked to see the base plan document.

NOTE: This feature is to provide general information only, does not constitute legal advice and cannot be used or substituted for legal or tax advice.

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