Additional Information for SAR

[Guest meggie]

I'm drawing a blank. What determines if "Additional Information" needs to be added to the standard contents of the Summary Annual Report? For example, if a DB plan is less than 70% funded--does that information have to be included in the Summary Annual Report to participants?

Thanks.

[WDIK]

You may be referring to additional information needed to maintain the exemption from the small plan audit requirement when nonqualified assets exceed 5% of total assets.

[Lynn Campbell]

Perhaps you are talking about the requirement to include in the SAR the name of each institution holding qualified assets in the Plan and amount held - in order for small plans to avoid the small plan audit requirement, regardless of how much, if any, non-qualified assets are in the plan?

[Guest acm_acm]

This came up at work for a client. I am not sure about everything that might have to be added to an SAR, but if a DB plan that is less than 70% funded on the RPA'94 CL (which is not necessarily the same as the same as the Trigger/Gateway %), then the SAR must disclose that.

Searching on "less than 70%" "summary annual report" at Yahoo! yielded the following as the third hit.

Hearing Archives :Committee on Ways & Means :: U.S. House of Representatives :

... status to workers under current law is the summary annual report (SAR). ERISA[1] and DOL regulations ... its current liability if the percentage is less than 70 percent. ...

waysandmeans.house.gov/ hearings.asp?formmode=view%26id=664 - 43k - Cached - More pages from this site

The link is...

http://waysandmeans.house.gov/hearings.asp...ode=view&id=664

Statement of The Honorable Ann L. Combs, Assistant Secretary for Employee Benefits Security, U.S. Department of Labor

Testimony Before the Subcommittee on Select Revenue Measures

of the House Committee on Ways and Means

July 15, 2003

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Current Law

The most basic disclosure requirement of a pension's funding status to workers under current law is the summary annual report (SAR). ERISA[1] and DOL regulations require pension plans to furnish a SAR to all workers and retirees. The Form 5500, used by private sector pension and other employee benefit plans to annually report information to the Department of Labor, the Internal Revenue Service and the PBGC regarding the financial condition, investments and operations of their plans, is due seven months after the end of the plan year with a potential extension of an additional two and a half months. Following the filing deadline of the Form 5500, pension plan sponsors must then distribute the SAR within two months.

Corporate pension plan sponsors must use a SAR to disclose certain basic financial information from the Form 5500 including the pension plan's net asset value, expenses, income, contributions, and gains or losses. A pension plan's net asset value is calculated based on the market value of assets minus the plan's expenses incurred during the plan year. The SAR must also include the current value of a defined benefit plan's assets as a percentage of its current liability if the percentage is less than 70 percent.

The "current liability" is a plan's liability as of today, it is intended to reflect a pension plan's liability assuming the employer's plan will continue indefinitely. It does not reflect a plan's "termination liability" -the cost to a company of terminating its pension plan by paying lump-sums and purchasing annuities in the private market that reflect the benefits workers have earned. This is an important distinction to workers concerned about the pension plan terminating.

[Guest selwyn]

See ERISA Sec. 104(b)(3) which requires SAR contents

"...including the percentage determined under 103(d)(11)..."