Plan Design - Establishing a Retirement Plan

Plan Administrator Guide: Implement Your Retirement Plan


A company sponsored retirement plan begins with a written document that serves as the foundation for day-to-day plan operations. In the near future, you will participate in a plan design meeting with Leading Retirement Solutions. The purpose of this meeting will be to select the plan’s operational features. Leading Retirement Solutions will make recommendations, during this process, as well. We will cover 6 key topics, during this meeting: 
  • Eligibility-age and service requirements 
  • Compensation & Type of Employees 
  • Contributions-employee and employer 
  • Vesting 
  • Distributions-hardship, age and participant loans 
  • Miscellaneous Matters 


Below are four basic actions necessary to establish a tax-advantaged retirement plan: 
1. Adopt a written plan, 
2. Arrange a trust fund for the plan’s assets, 
3. Develop a recordkeeping system, and 
4. Provide plan information to participants

We are prepared to take the next step with you; designing and adopting the written plan documents, including an Adoption Agreement, Basic Plan & Trust Document and IRS Determination Letter. 


A retirement plan begins with a written document that serves as the foundation for day-to-day plan operations. You and your employees are bound by the terms of the plan document which can be amended and changed from time to time. You will need to decide on the type of retirement plan that is best for you (LRS will help you make this decision) - a traditional 401(k)/403(b) or a safe harbor 401(k)/403(b)*.  

Traditional Plan: A traditional 401(k/403(b) plan offers the maximum flexibility of the three types of plans. Employers have discretion as to make contributions on behalf of all participants, to match employees’ deferrals, or do both. These contributions can be subject to a vesting schedule (which provides that an employee’s right to employer contributions becomes non-forfeitable only after a period of time). In addition, a traditional 401(k/403(b) allows participants to make pre-tax/Traditional contributions through payroll deductions. The plan may be drafted to also allow post-tax/Roth contributions. Annual testing ensures that benefits for rank-and-file employees are proportional to benefits for owners/managers. 

Safe Harbor Match Plan: A safe harbor 401(k/403(b) plan is similar to a traditional 401(k)/403(b) plan, but, among other things, must provide for employer contributions that are fully vested when made. However, the safe harbor 401(k) is not subject to many of the complex tax rules that are associated with a traditional 401(k)/403(b) plan, including annual nondiscrimination testing. 

Once you have decided on the type of plan for your company, you will have flexibility in choosing some of the plan’s features -- such as which employees can contribute to the plan and how much. Other features written into the plan are required by law. For instance, the plan document must describe how certain key functions are carried out, such as how contributions are deposited in the plan. 

TRENDS IN PLAN DESIGN: IRS survey of retirement plans reveals trends in retirement plan design: 
A recently released IRS survey shows some trends in the design of retirement plans. The use of particular design features can vary greatly based on the industry, geography, and size of the employer. Plan sponsors may find the results of interest as they consider any design changes to their own retirement plans. The IRS sent a questionnaire to over 1,000 sponsors of 401(k) plans in 2010. The questionnaire elicited responses on a number of design elements, including those relating to eligibility, contributions, loan, and withdrawal features. Ninety-eight percent of the plan sponsors responded. Some of the findings include the following: 

The following chart contains highlights of the findings from the survey.
The survey was conducted for the plan years 2006-2008 and represents the most recent survey conducted by the IRS. A copy of the survey questionnaire and an interim report can be found at: IRS Compliance Check Questionnaire


You have secured Leading Retirement Solutions to assist with several of the key components related to implementing and managing a company sponsored retirement plan. Over time, LRS and our team members will assist you in fulfilling the following requirements and more! 

Arrange a trust fund for the plan’s assets - A plan’s assets must be held in trust to assure that assets are used solely to benefit the participants and their beneficiaries. The trust must have at least one trustee to handle contributions, plan investments, and distributions to and from the retirement plan. Since the financial integrity of the plan depends on the trustee, this is one of the most important decisions you will make in establishing a retirement plan. 

Develop a recordkeeping system - An accurate recordkeeping system helps track and properly attribute contributions, earnings and losses, plan investments, expense and benefit distributions in participants’ accounts. Leading Retirement Solutions will help you in keeping the required records. The recordkeeping system will help you and Leading Retirement Solutions prepare the plan’s annual return/report that must be filed with the Federal government. 

Provide plan information to employees - As you put your retirement plan in place, you must notify employees who are eligible to participate in the plan about your plan’s benefits and requirements. A summary plan description, or SPD, is the primary vehicle to inform participants and beneficiaries about the plan and how it operates. The SPD typically is created with the plan document and is provided by Leading Retirement Solutions. You will need to send it to all plan participants. In addition you may want to provide your employees with information that emphasizes the advantages of joining your retirement plan. Employee perks - such as pre-tax contributions to a retirement plan (or tax-free distributions in the case of Roth 401(k)s), employer contributions (if you choose to make them), and compounded tax-deferred earnings - help highlight the advantages of participating in the plan.  

Leading Retirement Solutions

(206) 430-5084 phone
  (800) 974-2814 (toll free)


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