|Aug. 14, 2018 | www.fisherphillips.com|
Most small to mid-size employers sponsoring a 401(k) plan maintain their plan on a pre-approved prototype document. If you’re not familiar with the term pre-approved prototype plan, it consists of a “check the box” document called an Adoption Agreement that is about 25 pages long and a Basic Plan document that can be up to 100 pages long (small type). These two parts comprise the formal written plan document required under ERISA.
Prototypes are designed as a one-size-fits-all document that is free to an employer who agrees to use the bank or financial institution that sponsors the plan. Someone checks boxes and the result dictates the design and administration of the plan. If the employer changes the plan vendor, it almost always has to adopt the prototype document of the new vendor.