401(h) Plan Design Checklist for Advisors
Most 401(h) work boils down to three buckets: document, design, administer. This checklist helps advisors keep all three honest.
Key takeaways
- Document the structure before debating the details.
- Design the participant class deliberately.
- Integrate actuarial work end-to-end.
- Build an administration cadence that survives staff turnover.
Documentation
Confirm the underlying qualified plan exists and that the 401(h) provisions are explicit, complete, and current.
- Plan amendment establishing the 401(h) sub-account.
- Eligible participant class clearly defined.
- Qualifying retiree medical benefits defined.
- Funding, forfeiture, and reversion mechanics addressed.
- Summary Plan Description updated.
Design
Make the structural choices before the spreadsheet choices.
- Which retirees are covered, and on what eligibility terms?
- Which medical benefits or premium categories are in scope?
- How are spouses and dependents treated?
- How does the design satisfy nondiscrimination?
Funding
Funding is actuarial and ongoing, not a moment-in-time deposit.
- Unified actuarial valuation covering DB/CB and 401(h) streams.
- Documented funding policy.
- Incidental-benefit monitoring methodology.
- Cash-flow review against business reality.
Administration
Set the cadence and document the procedures.
- Annual valuation, Form 5500, and operational review.
- Claims procedure and substantiation standards.
- Vendor list with documented responsibilities.
- Restatement calendar.
- Participant communications cycle.
Frequently asked questions
Availability, tax treatment, and plan design depend on the facts and circumstances of the employer, plan document, participant group, and applicable law. 401h.com provides general educational information only — not tax, legal, actuarial, investment, or ERISA advice. Consult qualified tax, legal, actuarial, and plan professionals.
401h.com Editorial
401h.com
The 401h.com editorial team publishes plain-English explainers on 401(h) retiree medical benefit plans. Educational only — not tax, legal, actuarial, investment, or ERISA advice.
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