Performance: How retirement plans we design are measured and made compliant with the government

ERISA: The Employee Retirement Income Security Act is a federal law covering all aspects of employee retirement plans. If employers provide plans, they must be adequately funded and provide for vesting, survivor’s rights, and disclosures.

Plan Trust Documents: Every qualified retirement plan is governed by a plan document that spells out the provisions of the plan. For example, the type of plan, eligibility, criteria for distributions, vesting, etc.

Summary Plan Description (SPD): A summary of the Plan Trust Document in layperson’s terms. All participants are to receive a copy of this document.

IRS Determination Letter: A qualified plan must satisfy the Internal Revenue Code in both form and operation. That means that the provisions in the plan document must satisfy the requirements of the Code and that those plan provisions must be followed. The IRS administers a determination letter program that enables plan sponsors to get advance assurance as to the form of their retirement plan document.

5500 Tax-form: The IRS, Department of Labor, and Pension Benefit Guaranty Corporation jointly developed the Form 5500-series returns for employee benefit plans to satisfy annual reporting requirements under ERISA and the Internal Revenue Code. The information generally includes how many participants, total assets, distributions, etc. Plan sponsors must generally file the return on the last day of the seventh month after their plan year ends. (July 31 for a calendar-year plan). If an extension is filed, the deadline is extended another 2.5 months.

Summary Annual Report (SAR): The SAR is a narrative summary of the plan’s financial status and summarizes the information on the plan’s annual report (Form 5500).It is to be distributed to plan participants. The SAR should include the following: administrative expenses incurred by the plan; amount of benefits paid to participants and beneficiaries, total value of plan assets, a pension plan’s compliance with the minimum funding standards, and right to receive a copy of the full annual report, or any part thereof.

Nondiscrimination Testing: Nondiscrimination testing is required for qualified retirement plans to ensure that benefits under the plan do not discriminate in favor of officers, owners, shareholders, employees in authority of other employees or any employees classified as highly-compensated employees (HCEs).