One of the most common problems I see with retirement plans is that the plan sponsor says, “That’s not what we meant.”
Unfortunately, your plan document doesn’t know what you meant.
It only knows what it says.
A plan sponsor may intend to exclude a certain group of employees. They may intend to provide a match after one year of service. They may intend to use one definition of compensation and operate the plan using another.
Intent does not fix bad plan language.
Retirement plans are governed by written documents, and those documents need to match how the plan is actually being administered. When there is a disconnect, the plan sponsor can end up with an operational failure that needs to be corrected.
This is why plan sponsors should not treat plan documents like something they only look at when the plan is first established.
You should understand the major provisions of your plan. Eligibility. Entry dates. Compensation. Employer contributions. Vesting. Distribution provisions. If your payroll and HR departments are operating one way while the plan document say another, it needs to be fixed.