This is the second in our EGTRRA Restatement Series, the purpose of which is to help retirement plan sponsors handle the required amendment and restatement of their retirement plans.

On Monday, I discussed Why A Law Passed In 2001 Is So Important To Retirement Plans In 2009.

Today’s post is about the written plan document requirement. Seems obvious, doesn’t it, that in order to have a plan, you have to have it in writing? Obvious, yes, but also it’s one of the fundamental requirements that make a retirement plan “qualified”.

A “qualified retirement plan” means that the retirement plan is afforded special tax treatment for meeting a bunch of requirements of the Internal Revenue Code (the “Code”). Some of the qualification requirements have to be met in the document, and others of which have to be met by the manner in which the plan is operated.

The plan document defines the rights and obligations of the plan sponsor, participants, and beneficiaries. It’s also the basis for the IRS determining that the plan is tax-qualified in its form.

Here’s a few things you may not know about plan documents:

First, contributions to a qualified plan’s trust must be made to a trust that is valid under "local law". That is, created and maintained as a domestic trust in the United States. So no offshore stuff.

Second, that doesn’t mean that all qualified retirement plans have trustees. The plan can be funded solely through annuity contracts issued by an insurance company or custodial account held by a bank. 

Third, the plan doesn’t have to first be submitted to the IRS for approval to qualify for tax-favored status. Whether to submit the plan or not is one of those facts and circumstance questions. But that’s a matter I’ll discuss later.

Now here’s where the EGTRRA part applies. Just because a plan is not submitted to the IRS for approval, it still must be amended periodically. The plan can lose its tax qualified status if the plan sponsor fails to make required plan amendments on a timely basis – even if the changes don’t affect the plan’s operation.

So where do you get a plan document? The retirement plan marketplace offers a number of alternatives: individually designed or plans pre-approved by the IRS. And that will be the subject of my next post on Monday. 

In the meantime, who says ERISA isn’t cool. The picture above is the My Document Laptop Case inspired by the My Document Windows icon. Well, maybe more geeky than cool. It can be found on the designboom website and can be bought directly from the designer in Taiwan.