Separate Trust Document - Not a Requirement?

[MrsMacias]

Is there any reason why a plan with individual named trustees would be exempt from having a separate trustee agreement that includes provisions covering such matters as the powers and duties of trustees, investment authority, and the kinds of investments that may be made? 

Here's some background, a client of ours is changing custodial platforms and the custodian has requested a copy of the plan's trust agreement. This is very standard in my experience. I noticed we didn't have a copy of the signed trust agreement for Cycle 3 and asked the client for a copy. The advisor reached out and indicated that they thought a plan with an individual trustee wasn't really required to have a trustee agreement. The plan uses a pre-approved document and the document provider does provide a standardized trust agreement. 

I know that they are not required to use the document providers standardized trust agreement but I've never heard of a plan being exempt from having one. 

[Susan L]

Me neither. If I may add a follow-on question: can a plan sponsor even have a trust without a trust agreement? Finally, in the absence of insurance and a custodial account, I've always thought a qualified plan needs to hold its assets in a trust account. True?

[Peter Gulia]

Even if the retirement plan is not ERISA-governed and a relevant State’s law recognizes an oral trust, the IRS might assert that a written trust is a condition of I.R.C. § 401(a)-qualified tax treatment.

Consider, for example, 26 C.F.R. § 1.401-2(a)(1) https://www.ecfr.gov/current/title-26/part-1/section-1.401-2#p-1.401-2(a)(1).

That the Treasury’s interpretation speaks of what the trust instrument must provide suggests the Treasury’s interpretation that the trust must be written.

While there might be other interpretations, few clients want unnecessarily to interpret tax law contrary to a long-established mainstream.

This is not advice to anyone.

[MrsMacias]

Thank you, this makes sense to me. 

[Artie M]

If an ERISA-covered qualified plan, it must have a written trust instrument somewhere unless an exception to ERISA’s trust requirement applies.  As noted by @Susan Labove, I believe the only exception is through the use of qualifying insurance contracts or other arrangements exempted under ERISA §403(b)

 The trust provisions do not have to be in a separate stand-alone document, but generally they must be in writing—either integrated into the plan document, in a separate trust agreement, or in another written instrument incorporated into the plan arrangement.

DOL Reg. § 2550.403a-1(a) states plan assets must be held by trustees “pursuant to a written trust instrument.” Like above the only authorities I see from the IRS on this point is the Reg that @Peter Gulia points out. This is reiterated in IRS Publication 560. 

For a preapproved plan, the written trust terms may be buried in the basic plan document, an adoption agreement attachment, or the provider’s trust/custodial document. Also I note some other less than spectacular authority but nonetheless a statement by the IRS at https://www.irs.gov/retirement-plans/preapproved-retirement-plans-adopting-employer? telling adopting employers of pre-approved plans to retain the signed adoption agreement, main plan document, and trust, which implies or reflects the expected written-document structure.

But if you have reviewed all governing documents and there are no trust provisions and no incorporated trust instrument, seems to be a document problem.