The Business Plan is a representation of the entrepreneur and the entrepreneur’s understanding and grasp of the business venture.
A Plan Trustee / Fiduciary must be able to prove, though the gathering of evidential information, that the entrepreneur was able to demonstrate the viability of the business as a prudent investment for a retirement plan. The Business Plan, along with other information such as a business valuation, is part of this evidential information.
It is important to remember that a Retirement Plan is a third party investor and it is necessary to present information to the plan to assist it in making a prudent investment regarding the small business investment opportunity. Remember, the IRS and DOL see a retirement plan as an independent party and the plan must be treated with the same level of respect as any other investor.
In the end, a retirement plan investment file should contain information similar to that which would have been provided had the plan been a person because a person would expect to be provided information necessary to make an educated informed investment decision.
Additionally, the Business Plan will go a long way in helping address inquiries and discovery issues in the event of an IRS or DOL audit.