Participant disclosures and Communications – What and When?

I am often asked by clients, who should get this notice and when?  There are a number of required documents that need to be delivered to participants to effectively communicate retirement plan details.  With many new rules there has been an added number of documents that must be delivered to  participants by specific dates.  The failure to do so could have serious consequences.

We have prepared a list that you can refer to so you can easily identify what document should be delivered by date.  We will discuss in an upcoming article what options are considered Safe Harbor for delivery by the Department of Labor.

Summary Plan Description –  This document should be automatically distributed or made available to participants within 90 days of becoming covered by the plan and to pension plan beneficiaries within 90 days after first receiving benefits.  However, a plan has 120 days after becoming subject to ERISA to distribute the SPD.  An updated SPD should be furnished if changes are made to the Plan Document or SPD information.

Summary of Material Modifications - Automatically to participants and pension plan beneficiaries receiving benefits; not later than 210 days after the end of the plan year in which the change is adopted. A Summary of Material Modification is produced when there is a material modification in the terms of the plan or any change to the information in the Summary Plan Description.

404(a)5 Disclosure – General information about the plan and potential administrative and individual costs, as well as a “comparative chart” of key information about plan investment options, must be furnished annually. On at least a quarterly basis, participants must receive a statement of the dollar amount of administrative and individual fees that were charged to their accounts. This applies to plans valued on daily basis. Plans valued on an annual basis participants must receive that statement at least annually.  This information may, in certain circumstances, be included in the plan’s SPD and participants’ Periodic Pension Benefit Statements.

Safe Harbor Notice –  Generally, the safe harbor notice must be provided within a reasonable period before the beginning of the plan year. The timing requirement is deemed to be satisfied if the notice is provided at least 30 days (and not more than 90 days) before the beginning of each plan year. If the notice is not provided within this time frame, whether the notice is timely depends upon all of the relevant facts and circumstances.

Maybe Safe Harbor Now Safe Harbor – Generally, the safe harbor notice must be provided within a reasonable period before the beginning of the plan year. The timing requirement is deemed to be satisfied if the notice is provided at least 30 days (and not more than 90 days) before the beginning of each plan year. If the notice is not provided within this time frame, whether the notice is timely depends upon all of the relevant facts and circumstances.  When the plan is amended to now become a Safe Harbor Plan a new notice needs to be delivered 30 days prior to year end to all eligible participants.

Summary Annual Report – Automatically to participants and pension plan beneficiaries receiving benefits within 9 months after end of plan year, or 2 months after due date for filing Form 5500 (with approved extension).

Notice Of Individuals Benefits( Vesting Statement) - For plans that allow self-directed investments, statements must be furnished at least once each calendar quarter.

For plans that do not allow self-directed investments, statements must be furnished at least once each calendar year.

 

- Stephen Dix, ERPA, QPC, QKA

Mr. Dix is a Senior Pension Consultant and owner of Wellington Retirement Solutions, Inc. with over 25 years of experience in the retirement plan industry. Wellington Retirement Solutions, Inc. can help you determine what type of 401(k) Plan is ideal for your business. Even if you already have a 401(k) Plan, allow us to review your Plan provisions for peace of mind to know that the design of your 401(k) Plan meets your goals & objectives. We are committed to providing personal service excellence. If you have any questions regarding the information in this article then please reach out to one of our specialists at (888) 934-4015.

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