RETIREMENT PLAN DISCLOSURES
The Department of Labor requires sponsors of participant-directed, defined contribution retirement plans to provide various notices about their plan to eligible participants and beneficiaries during the year. Most of these disclosures are not required for simplified employee pension (SEP) plans and SIMPLE plans. Some of the most common disclosures include newly eligible participant disclosures, quarterly disclosures, annual disclosures, and change notifications.
Any new hires who become eligible to participate, as well as new beneficiaries and new alternative payees under a qualified domestic relation order who have the ability to direct investments, must be provided with the newly eligible participant disclosure notice. This notice must be provided to the individual prior to the date the individual can first provide investment direction. This notice will explain a participant’s options for giving investment instruction among other features of the plan.
Quarterly disclosure statements are required to be provided to all participants with account balances. These statements must provide participants with information about their account balances and vested benefits. The report must also provide information on fees and expenses actually paid.
The annual disclosure notice which contains investment and fee information must be provided to eligible employees, beneficiaries, and alternate payees. These notices must be distributed any time during the year and need to give general information about the plan and potential administrative and individual costs along with a comparative chart of key information about plan investment options.
A fourth notice has to do with changes to the plan. Any time a change to the plan investment options or fee information is made, a notice must be given to all eligible participants 30 to 90 days prior to the change taking effect.
For additional information concerning disclosure notices, contact your third-party administrator (TPA). Your TPA should be able to provide you with additional information and may have sample disclosure letters to use.