New Plan Document Every Year?

[Guest Kristine]

Do we have to write a new Plan Document every year?? Why or why not?

[Guest b2kates]

Might you be confusing this with the participants having to make a new election every year?

[Guest Kristine]

No. I want to know if we need to write a new Plan Document and have it signed every year.

Might you be confusing this with the participants having to make a new election every year?

[oriecat]

Why do you think you would? Unless you specify that the plan doc expires or something...

[namealreadyinuse]

No. Because it is not required by the Internal Revenue Code.

[Guest mjb]

There is no requirement that the plan be signed or adopted. prop reg. 1.125-1 Q-2. It only need to be written.

[Guest Kristine]

Good info! thank you all very much!!!

[namealreadyinuse]

There is no requirement that the plan be signed or adopted.

Sweet!

[jmor99]

Just out of curiosity, if the plan doesn't have to be adopted, then why do the plans I've seen have a board resolution adopting the plan?

[Guest mjb]

Because lawyers need something to do at board meetings to justify their fee for attending the meeting. Seriously a board resolution is only needed if corporate by laws require board approval of welfare plans. Most boards do not want to be bothered with discussing welfare plans and delegate adoption to corporation's officers.

[QDROphile]

As much as I like cynical and cryptic responses, it is only fair to warn readers that the comment about board action is oversimplified, but not wrong.

[namealreadyinuse]

the comment about board action is oversimplified, but not wrong.

What about the "signed or adopted" statement?

[Guest mjb]

What is oversimplified in the comment about about board action?

[GBurns]

The requirement for the Board Resolution etc is not determined by the using company but by the providing company. It does not matter whether or not the corporate by laws require it, it matters if the provider requires it.

In any event , if "Most boards do not want to be bothered with discussing welfare plans and delegate adoption to corporation's officers.", this is delegated by means of a Board Resolution is it not? In that event a copy of that "delegation" of authority, a Board Resolution, is used, so there is a Board Resolution for the adoption anyhow.

I thought that Board action, hence resolution, adoption etc, was required for all major actions especially those that are not part of the day to day operation of the company.

A new Cafeteria Plan does not seem like day to day operation activity.

All the insurance companies that I have seen also require a signed Board Resolution etc for new health coverage. This requires no lawyers so lawyer fees are not an issue.

All the banks that I have seen require a Board Resolution for the opening of a bank checking account. It matters not what the by-laws state, it matters what the bank requires for the opening of an account. No lawyer needs to attend any meeting so again the lawyer fee is not an issue.

[Guest mjb]

Providers I know dont care about board resolutions. They want a signed contract such as an ins policy or administrative service agreement with the plan sponsor. The company usually defines the duties and responsibilities of corporate officers in by laws not board resolutions. Adoption of welfare plans do not require board action it because it is not material to the companys' operations. You seem to be out of touch about what board of directors do in the limited time they have to meet and review corporate activities.

[GBurns]

Just in case I really had become out of touch, I gave you the benefit of the doubt, but as quite often has been the case I cannot find any support for your position.

Aside from Mom & Pop's, closely held, 1 man entities etc, which really do not use Boards or have Board meetings of the sort being discussed, I have not been able to find or come up with anything that would indicate any "limited time".

Board meetings are apparently both pre-scheduled and as needed. In other words a Board meeting is called when 1 is needed in addition to whatever is regularly scheduled (e.g 2nd Tuesday of every month). Board meetings last as long as they need to last. They are not set to meet for a finite time. No 2 hours and we are out of here. Although there will be an agenda of scheduled items that will be addressed, there are usually open items, whether motions for items for the agenda of the next meeting or current items that are addressed although not on the current agenda. Invariably the floor is open for motions.

In other words the Boards that I can find meet when needed for as long as is needed to attend to matters and are not subject to the "limited time" and restrictions that you see in the Boards that you are so much in touch with.

I wonder what the experiences of others are?

As for "Adoption of welfare plans do not require board action it because it is not material to the companys' operations." That is the point. Boards do not handle the day to day operations, so since adoption of a welfare plan is not material to the operation, it is therefore a Board matter. You cannot have it both ways.