In the second stage – Establishing – business owners undertake actions to put in place the chosen retirement plan. Depending on the type of plan being established, this stage can have a range of administrative steps.
These steps may include:
- Arranging a fund for the plan’s assets,
- Adopting a written plan,
- Notifying eligible employees, and
- Developing a record-keeping system.
Arranging a fund for the plan’s assets:
A plan’s assets must be held in trust to ensure that the assets are used to benefit the participants and their beneficiaries and not used for other purposes.
Adopting a written plan:
Plans must be in writing and contain certain specified information that lays out how the plan works. You have flexibility in selecting your plan’s features, such as, who is included and when, who contributes and how much, etc.
Notifying eligible employees:
Once you set up the plan, you want your employees to participate. You need to notify those employees meeting the eligibility requirements specified in your plan document – such as having worked at your company for a certain length of time.
Developing a record-keeping system:
A record-keeping system is important in keeping track of the flow of money - such as the contributions and earnings in participants’ individual accounts, payments for services from plan assets, and distributions of benefits.
Forms and Publications:
- Forms useful in establishing a retirement plan.
- Publications useful in establishing a retirement plan.
Frequently Asked Questions:
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