You have now completed your research,
decided on the form of the plan your company will use, so
you're probably asking - what do I do now?
The next step is to draft the formal Plan Document that will
provide the foundation of your plan. This will contain the
definitions, terms, conditions and provisions of the plan. The
final plan document should be approved by the Board of Directors
or the senior officers of the company.
Once the plan document has been approved by your legal and
tax advisors and signed off by the Board of Directors, you are
ready to proceed with the remaining plan documents and forms.
These are usually distributed to the eligible executives in
the form of an enrollment package.
Whether or not you are considering using an online or paper
enrollment, you will need to send an announcement letter,
informing eligible participants of the benefits of joining the
plan. This is usually distributed several weeks prior to the
start of the enrollment period.
When the enrollment period is complete, you must inform the
Department of Labor
that you are installing a Non-Qualified Deferral Plan.
should include the following:
- Plan sponsor's name
- Plan sponsor's address
- Plan sponsor's tax ID number
- Plan name
- Number of participants
If you are a public corporation, unless
you qualify for one of the exemptions, SEC regulations
require you to file an S-8 form.
Private companies may not use this form and should
configure their plans to qualify for one of the
While Deferral.com will allow you to do online enrollment,
there are times when you will need to provide hard copies of
the plan forms to your executives. In addition to a formal
copy of the plan document, a typical package would
- The Summary Plan Description (SPD) is a user friendly version of the plan
document, sometimes also known as the brochure. This summary
outlines and explains in plain English, the major provisions
of the plan and how they relate to the participants, often
supplying helpful examples. Plan sponsors are required to
provide this document to the participants.
- The participant Election Form is used by the eligible
executive to enroll in the plan. This form constitutes an
irrevocable election which, once made (with very limited
exceptions), may not be changed. Depending on the plan
provisions, this form might have several sections, for
The deferral election section
where the executive indicates the amount and type of
compensation to be withheld from their pay check
- The account allocation section - if the plan allows
the executive to divide his/her deferral amount across
more than one account, this is where he/she would indicate
what percentage to put in each account. If the plan only
has one account, this section would not be necessary
- The fund allocation section - if the plan tracks more
than one investment return, this is where the executive
selects the funds and percentages for each account. If the
plan has only one investment choice (as in an interest
rate only plan) this section would not be necessary.
- The distribution section is where the executive
decides how (and, if the plan allows, when) to receive
his/her account balance.
- The Beneficiary Designation Form,
unlike the Deferral Election Form, is revocable
and may be changed any time the participant wishes. While
different states may require specific language, this form
should always include areas to list more than one Primary
and Contingent beneficiary, a percentage field if more than
one person (or entity) is listed for each, and a tax ID#, if
available. This would be Social Security number for
individuals or a tax ID for charities or trusts. While a tax
ID number is not required, it is extremely helpful to the
administrator when trying to track down beneficiaries and
can greatly speed up the commencement of survivor payments.
- A self addressed, stamped envelope should be provided
for the participants to return their forms
Once your plan is effective and your
participants begin deferring contributions, you will need an
administrative services system to record, track and report the
participant account activity and balances. If you have entered your plan information and elected to
use the enrollment feature of Deferral.com, your participants
have done most of the work for you. All their elections have
been automatically entered in the database and you are ready
to begin administering your plan.
If you are interested in learning about
the Plan Administration functionality of
Deferral.com, please view our automated Demos or contact us at firstname.lastname@example.org.
The information contained on this Site
is general in nature and should not be considered legal or tax
advice. This information is provided for general educational
purposes. The facts of your particular situation, and
developments in applicable laws, rules and regulations or the
interpretation thereof, may affect the information as it
pertains to you.
You should consult with your attorney or tax advisor regarding your specific legal
or tax situation.