What You Need to Know About Plan Document Reviews

One of the most overlooked but critical conversations I have with employers is about the importance of Plan Document reviews. While topics like investment performance and contribution strategies often get more attention, ensuring that your 401(k) Plan Document is accurate and up to date is just as vital.

Why? Because under ERISA, plan sponsors are required to operate their retirement plans exactly as outlined in their Plan Documents. If you haven’t reviewed yours in several years, you may be unknowingly operating the plan incorrectly. And that can quickly become a compliance issue.

Why Plan Document Reviews Matter

Think of the Plan Document as the rulebook for your retirement plan. If the plan says eligibility time period is six months after hire, but you’ve been letting employees enroll after three months, you’re technically in violation. Even small discrepancies like this can cause problems if they come to light.  

At worst, repeated failures to follow the plan could even risk the plan’s tax-qualified status. More commonly, errors—such as depositing contributions from bonuses when bonuses were excluded from the plan definition of compensation, for example—can result in refunds, corrective filings, penalties, and administrative headaches.

How Reviews Work

To help employers stay compliant, we often conduct what we call an “operational audit.” We take the full Plan Document—often 100+ pages of dense legal language—and distill it into a practical spreadsheet with three columns:

• What your document says

• How you’re actually operating today

• How industry best practices suggest you should be operating

Together with the employer, we walk through 30 to 50 key provisions, one by one.  

The goal is twofold:  

• First, to confirm you’re following your own rules; and

• Second, to evaluate whether your provisions are competitive and aligned with current business goals.  

This process turns what could be a tedious legal review into a clear, actionable discussion.

When Should You Review Your Plan Document?

As a rule of thumb, plan sponsors should review their Plan Document every two to three years. But there are certain events that should also trigger a review:

• Changing providers: When moving from one recordkeeper or TPA to another, your Plan Document is rewritten on the new provider’s system. This is the perfect time to review.
  

• Making an amendment: If you’re already changing one provision (such as eligibility or compensation), it usually makes sense to review the entire document. Since the cost of a single amendment is often similar to making multiple updates, you can address everything at once.
  

• Corporate changes: Mergers, acquisitions, or other structural shifts should always prompt a document review to ensure alignment.

What Does It Cost?

Plan Document amendments are legal updates prepared by your plan administrator, TPA, or ERISA attorney and they typically charge a flat fee (somewhere in the neighborhood of $500 to $1,000). That said, in our service model here at LoVasco, conducting the operational audit itself is included, so our clients get the benefit of a review without added advisory cost. While we cannot process the amendments themselves as your consultant, we can and do make recommendations on what amendments clients may wish to consider, based on the operational audit.

Why It Matters to Employers

Skipping reviews can expose you to compliance violations, unnecessary costs, and missed opportunities to stay competitive. Meanwhile, keeping provisions current ensures you’re both legally compliant and aligned with best practices that improve recruitment, retention, and employee satisfaction.

The things to know and remember are:

• A Plan Document review is one of the most important steps you can take to ensure compliance with ERISA.
  

• Reviews should be done at least every 2 to 3 years, or whenever major plan changes occur.
  

• Reviews aren’t just about avoiding mistakes—they’re also a chance to modernize your plan and align with best practices.

At LoVasco, we take the administrative burden off your plate by simplifying complex Plan Documents into clear action items. If it’s been more than a few years since your last review, or if you’ve gone through recent business changes, now may be the right time to schedule one.