What are the 401(k) participant statement reporting requirements?

[pbarrett]

We work with many brokerage firms that have 40l(k) funds invested for participants in various mutuals funds. We are a 3rd party TPA firm. We have a takeover plan. The prior TPA sent the brokerage firm's statement (1/01/01 thru 12/31/01) cash basis along with the SAR. The census data was not included (e.g., date of hire, vested %) on any statement to the participant. Also, it was simple a cash statement. It did not account for the deferrals/match contributions that came in the following year for the prior year. The 5500, of course, did. So did the SAR.

We have also sent an additional statement based on an accrual basis, which reflects all of the census info and vesting percentile.

Am I doing too much work? Does the DOL/IRS have any regs on what the participant must receive on an annual basis (I know an SAR and SPD must be given at the appropriate times).

All of are plans are based on annual valuations.

Any thoughts would be appreciated.

[KJohnson]

There is actually no requirement that Participants be automatically provided with account statements every year. The statutory requirement is only that a Participant be provided a statement upon written request and within one hundred and eighty days after the Plan Year in which the Participant terminates employment. Only one statement need be provided per year in response to a written request.

I believe that the Pension Security Act that cleared the House Commitee on Education and Workforce last week would requie quarterly statements.

[pmacduff]

For most of our clients, we prepare year-end cumulative statements (the funding houses are usually only quarterly) and we do include the accrued contributions. One of the biggest factors for our clients requesting these statements is that they want the participant to see the vesting which is not provided on the quarterly participant investment statement. It may be extra work, but if the client pays you.....??? I know as KJohnson mentioned, it's not required, but in Pensions it's usually better safe than sorry and it might help your client if ever necessary.

[KJohnson]

I agree that it is a good idea to give at least annual statements, and I believe that almost everyone in the industry agrees on this. Mandated annual satements was the recommendation of the ERISA Advisory Council back in 1996:

http://www.dol.gov/ebsa/adcoun/3dparty.htm

Also, I don't know what will come out of Congress with the new pension reform proposals, but I think some form of updated requirement to issue statements is one of the least controversial issues.

[BFree]

The DOL has commented that putting accruals on statements, and not clearly labeling them as such, is something that they do not like to see.