Plan Document Question

When a Plan switches recordkeepers, are they able to remain on the same plan document, even though it may be a prototype document for the recordkeeper they're leaving? We have a plan that is moving to a recordkeeper that provides no plan document support, so does this mean the only option is for the employer to move to an individually designed document, or can they use the one they're currently on?

You may be able to continue to use the prior recordkeeper plan document, if they allow it.  But even if they do allow it, they will probably not maintain it for your plan... amendments (required or otherwise), restatements, etc.  You will probably have to go looking for a new plan document, especially since restatements are now in "cycle".

There is no need for your new document to be anything other than pre-approved.

Just a curiosity:

Does a publisher of IRS-preapproved documents (which I imagine gets most of its revenue from licenses with retirement-services providers and other intermediaries) also allow purchases directly by an employer or plan sponsor?

1 hour ago, Peter Gulia said:

Just a curiosity:

Does a publisher of IRS-preapproved documents (which I imagine gets most of its revenue from licenses with retirement-services providers and other intermediaries) also allow purchases directly by an employer or plan sponsor?

Some of them do - and will allow a one-time purchase by an interested parties.  Many attorneys do this for their few clients who need a document.  The problem is still "maintenance."  Who is going to keep track of required amendments?  How will other amendments be handled?

To the OP - if a service provider doesn't provide document services, find another service provider.  And as for using the prior's document, it's probably copyrighted, and there may be contractual issues as well as the issues posted by others.

Often, the sponsors of the documents will also provide interpretation of the document to some degree.  Or rather, they go back to the document's author (Relius, FT William, etc) with help for support.

If the plan sponsor is no longer a client, the record keepers won't support it any more.

Also, I sincerely doubt the new record keeper or TPA will want to do required amendments to plan docs they do not directly service.

Can the cost of the new plan document be passed onto the participants?  Or is that a settlor function?

9 minutes ago, BG5150 said:

Can the cost of the new plan document be passed onto the participants?  Or is that a settlor function?

If it's the current required restatement, then the plan can pay the cost.

MoJo, thank you for the helpful information.

I remember when a Corbel document was obtainable only if an attorney-at-law or certified public accountant signed the assembly questionnaire.  Corbel did that to set up a defense against an assertion of unauthorized practice of law.

Am I right in guessing Relius, FTWilliam, and others no longer require anything like that?

(Please understand, I don’t advocate for or against any way of doing things.  Rather, I’m seeking to learn about what’s available.)

But not when switching providers, right?

17 minutes ago, BG5150 said:

But not when switching providers, right?

Well, we know a voluntary amendment fee (for a change in eligibility, etc) is a settlor cost. So a change in recordkeeper (since it's voluntary), I would say we start with "no" as the answer. But if the sponsor and trustee document that it's a good fiduciary decision and in the best interest of the participants, I think the case could be made that it's a valid expense.

2 hours ago, Peter Gulia said:

MoJo, thank you for the helpful information.

I remember when a Corbel document was obtainable only if an attorney-at-law or certified public accountant signed the assembly questionnaire.  Corbel did that to set up a defense against an assertion of unauthorized practice of law.

Am I right in guessing Relius, FTWilliam, and others no longer require anything like that?

(Please understand, I don’t advocate for or against any way of doing things.  Rather, I’m seeking to learn about what’s available.)

The issue of unauthorized practice of law has been "settled" (much to the dismay of bar associations) so I'm not aware of the requirement that an attorney create the document for any provider.  I looked into doing a doc for a client from FTW a few years ago, and I don't recall seeing anything that would prohibit it (but I am an attorney - but they didn't know that at the time).

In this day and age, most providers provide a document - as do most TPAs.  Not sure why they wouldn't (it can be a source of revenue if they charge for restatements and amendments).  Where I work, you get the first one free at transition to us, and then pay for amendments and restatements thereafter.  We use a heavily modified Relius document (it's really our own as it's been significantly customized).  Every other provider I've worked for had a document and preferred clients use it - to make ops run more smoothly (knowing the document, where to find provisions/answers when necessary)/

Whenever we send out a document or amendment for signature, we suggest they go over it with their counsel.

The modest effort a few State bars put on seeking to restrain some business practices about documenting employee-benefit plans was mostly a 1980s thing.  (And efforts from voluntary bar associations were even fewer and more modest.)

In 1990, Florida’s Supreme Court decided The Florida Bar re Advisory Opinion—Nonlawyer Preparation of Pension Plans, 571 So. 2d 430, 15 Fla. L. Weekly S617 (Fla. Nov. 29, 1990).  It rejected the Florida Bar’s proposed advisory opinion, and recognized that a State lacks power to forbid a practice authorized by Federal law.

After that decision and especially after developments in the IRS’s procedures about forms of documents, States’ efforts to restrain much of anything have almost vanished.

If anyone was wondering, for decades I’ve published my view that any person should be free to give legal advice (and to bear responsibility for her or its advice).

5 minutes ago, Peter Gulia said:

The modest effort a few State bars put on seeking to restrain some business practices about documenting employee-benefit plans was mostly a 1980s thing.  (And efforts from voluntary bar associations were even fewer and more modest.)

In 1990, Florida’s Supreme Court decided The Florida Bar re Advisory Opinion—Nonlawyer Preparation of Pension Plans, 571 So. 2d 430, 15 Fla. L. Weekly S617 (Fla. Nov. 29, 1990).  It rejected the Florida Bar’s proposed advisory opinion, and recognized that a State lacks power to forbid a practice authorized by Federal law.

After that decision and especially after developments in the IRS’s procedures about forms of documents, States’ efforts to restrain much of anything have almost vanished.

If anyone was wondering, for decades I’ve published my view that any person should be free to give legal advice (and to bear responsibility for her or its advice).

Peter, doesn't Florida still have a "document stamp" or some such tax on the books?

Florida imposes a tax that Florida’s Revenue department describes as a “documentary stamp tax”.  But each of its tax rates refers to the transaction and its amounts involved.

https://floridarevenue.com/Forms_library/current/gt800014.pdf

Discussions in BenefitsLink have considered whether and how Florida’s tax might apply to an individual-account retirement plan’s participant loan.

21 minutes ago, Bill Presson said:

Peter, doesn't Florida still have a "document stamp" or some such tax on the books?

That's for loans.

4 minutes ago, BG5150 said:

That's for loans.

Thanks. Fuzzy memory.

19 hours ago, BG5150 said:

Whenever we send out a document or amendment for signature, we suggest they go over it with their counsel.

We do to, but we use Docusign - and the time between receipt and signing is often less than a minute...  So it must have been a very, very quick review!  😁

8 minutes ago, MoJo said:

We do to, but we use Docusign - and the time between receipt and signing is often less than a minute...  So it must have been a very, very quick review!  😁

Yep same process here and same speed reader clients

In most cases there was time for review prior to final document going out for signature though.

My understanding is that the document vendors (e.g., Relius, ftwilliam) will not contract directly with a plan sponsor. They contract with retirement professionals who then provide document services to their plan sponsor clients.

I'm not sure exactly how the vendors define a "retirement professional," but it's not exclusively attorneys. I would describe their business model as being a  "wholesaler" to the "retailer" retirement community. Under this model, the vendors' clients are exclusively those who understand how to use the docs they license. In turn, the "retailers" get to contract with (and manage docs for) plan sponsor clients (and bear the risks that habits like speed reading could present....).