I can’t tell you how many times I’ve heard someone say, “It’s in our employee handbook.”
That’s great.
But if it conflicts with the retirement plan document, the handbook usually loses.
Your employee handbook is an important HR tool. It explains workplace policies, benefits, attendance rules, and company expectations. Your retirement plan document, however, is the legal document that governs how your qualified retirement plan operates.
The two are not interchangeable.
I’ve seen handbooks describe eligibility incorrectly, explain matching contributions that no longer exist, or promise features the plan doesn’t actually provide. Sometimes the handbook was written years ago and never updated after the plan was amended.
That’s where problems begin.
Employees read the handbook and expect those provisions to apply. Payroll relies on it when administering the plan. Then an audit or operational review reveals that the handbook says one thing while the plan document says another.
Guess which document the IRS and Department of Labor will look at?
The plan document.
This doesn’t mean your handbook isn’t important. It means someone should review it whenever your retirement plan changes. If eligibility, matching formulas, automatic enrollment, vesting schedules, or other plan provisions are amended, make sure your handbook reflects those changes.
Consistency matters.
Your handbook is designed to communicate benefits to employees. Your plan document is designed to satisfy ERISA and the Internal Revenue Code. Both have a purpose, but only one governs the operation of your retirement plan.
Don’t assume they’re saying the same thing.
Verify it.