How to Adopt a Written Plan for 401K

Do I have to hire a professional to draw up a written plan document for my proposed 401K? Or can I simply do it myself? Darren Rapozo, Dunwoody, Georgia, runs a photo studio.

Your 401K needs a written plan document that is IRS approved. If you are getting your plan set up by a financial institution like a mutual fund company, bank or insurance firm, then they will probably have the right kind of plan document ready for you. Usually, 401K plan providers have their own prototype plans that are designed in line with the IRS requirements.

If you want to set up your own plan using a DIY package like, then you may want to consult a professional about writing up the plan document before you actually start the set up process. When you decide to write you own plan document, you need not get prior IRS approval. However, if you prefer to do so, you can choose to get approval by paying a fee and asking for a determination letter. In case you have a financial advisor, he can tell you if you should indeed apply for such approval for your plan outline. In some cases, the fee is not applicable. So it is best for you to check with your advisor or look at the IRS website before you send in your fee. Remember that if in future, you employ some others for your business, a copy of the plan document must be given to them as well.

About Elliot Earl, Director, Pension Trade Association
Director, Pension Trade Association Founded in 1982, the Pension Trade Association [California Domestic Nonprofit Corporation #C1629080] is dedicated to helping workers save for their retirement through expanded coverage of 401k -type defined contribution pension plans.

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