Solo-K — The IRS Satisfactory Opinion Letter

You may wonder why this is listed under a Trustee’s administrative responsibility for the plan? You are working with a company that is sponsoring your Solo-K documents, right? Isn’t it their responsibility to ensure the documents are compliant with IRS and DOL regulations?

Quite honestly, you would be correct! However, this topic has been included as an administrative responsibility of the Trustee as the Trustee (most likely you) wants to ensure they are working with a company whose plan documents have received the Satisfactory Opinion Letter from the Department of Treasury.

Definition

When your plan document sponsor provides you with a letter from the Department of Treasury that the language of your plan and its documents meets and complies with IRS regulations, this is what is commonly referred to as the Satisfactory Opinion Letter. It is, more or less, your security blanket that your plan documents have been established in compliance with IRS regulations, and you will not subsequently be cited or be in violation of having plan documents that do not adhere to IRS and DOL guidelines for your Solo-K plan.

In other words, it is the Trustee’s responsibility to ensure the plan complies with IRS and DOL regulations with the assistance of these executed plan documents.

Don’t Assume….Ask!

If you are speaking to a company and they say “what” when you ask them whether they have and will be issuing an IRS Satisfactory Opinion Letter for your plan….run! Wait, seriously, run.

Marketing Companies with No Satisfactory Opinion Letter

Say is ain’t so Joe, but Joe is pretty quiet. Unfortunately, there are companies that are marketing and selling Solo-K plan documents without an IRS Satisfactory Opinion Letter.

Without this Letter, you cannot rely that your documents are compliant under the Code. And, in fairness to a company that merely forgot to send the Letter to you, we are speaking of a company that does not even have the Letter as proof they have secured approval from the Department of Treasury. Undoubtedly, there have been some companies that innocently forgot to send you the Letter vs. not having the Letter for their clients.

Marketing Company Using Another Company’s Letter

It is only fair to question that when one company uses another company’s Letter, this not only strikes as a bizarre practice, but you may face the risk that the documents you are being provided may not be compliant or maintained/updated. It probably goes without saying that your documents may not be maintained in compliance with IRS regulations.

One can only assume why they would be doing this, but the question still remains, “do you want to work with a company that is not even using their own Letter, rather another company’s…regardless of the reasons?”

Your job is not designing your own plan documents! You must feel comfortable with the ability to rely on the plan document sponsor to provide this service. If the company cannot provide you with a Satisfactory Opinion Letter or using the Satisfactory Opinion Letter of another company than their own, you should seriously consider being provided services by that company.