Vested Rights Letter Requirements

[Guest Lauren Plenner]

What information is required to be in a vested rights letter? i.e. is only the accrued benefit at age 65 required? Or, if the participant is married, is information regarding death benefits required?

[Guest Chuck Miller]

According to ERISA 2520.105, a particpant or bebeficiary has the right to request a statement that contains:

1) the total amount of benefits accrued;

2) what of those benefits is vested or when will they become vested;

3) what is lost if you should die before "a certain date" meaning... those dates being if you would die today, if you would die before being fully vested, if you would die after being fully vested.

[david rigby]

Technically, 2520.105 is a proposed regulation issued by the PWBA under ERISA section 105 (I think it was issued in July 1980).

From the phrasing of the original post, it appears that the question may center around what information is required following termination of employment. If that is the question, there is also a timeframe during which such information must be provided: to simplify, no later than the filing of the 5500 for the plan year following the plan year of termination.

[Guest Chuck Miller]

Sec. 105 has been amended several times but it does not seem to be a Temporary or Proposed regulation (according to my copy of the ERISA regs, CCH's Pension and Employee Benefits).

Also, participant notices would be goverened under the ERISA that a plan administrator must comply to any requests for information within 30 days or be subject to a penalty.

[Guest Lauren Plenner]

Pax, you are correct that the more specific question is: what information needs to be in the vested rights letter sent after termination of employment. Since this is not a participant request, the 30 days does not apply.

[Guest Chuck Miller]

I asked my friend Joan Brown of Kutak Rock in Denver your question and she replied:

Code Section 6057 and ERISA Section 105© require that a plan administrator who must file an SSA to Form 5500 must give each plan participant listed on the SSA a statement setting forth the nature, amount and form of the deferred vested benefit to which he is entitled and advise if any benefits are forfeitable if the participant dies before a certain date. (Essentially the information that goes on an SSA.) So only if you have to list the participant on an SSA do you have to provide this statement. If you do, the statement must be provided by the SSA filing date. 301.6057(e). Which is why so many plan administrators use the exceptions permitted on the SSA to avoid listing participants - they don't want the extra paperwork. Also, case law has made exceptions (there is a 6th Circuit case on this).