Notice Requirements?

[Guest fcdeacy]

We have a DB plan that offers the ability to repay a previous lump sum distribution in order to get back benefit service. Are there any notice requirements that we may need to follow with regard to this? As far as letting participant know this option is available to them when they come back, etc.....

Any help would be appreciated.

Thanks,

Fred

[SoCalActuary]

After researching this issue, I concluded that the law only requires the option if the participant was not vested.

Check your document to see if you have a more generous provision.

Meanwhile, check your 411 regulations to see if you can find examples. Otherwise, you just have to draft something that covers the intent of the reg's.

[david rigby]

Is it mentioned in the SPD?

[Guest fcdeacy]

It is mentioned in the SPD.

Here is the wording:

If you receive a lump sum settlement of a pension under this Plan and you are re-employed in covered service under this Plan, you may have prior service restored by repayment of the lump sum plus interest. Such payment must be made by the earlier of (a) the end of a five-year period beginning with reemployment or (b) the end of the fifth consecutive year following the date of distribution of the lump sum amount. If repayment is not made, prior service will be included for determining vesting service, but not for determining benefit service.

[Locust]

As a matter of practice, why not give a memo to rehired participants saying here is the SPD and you may have repayment rights as described on p. __ of the SPD. This type of notice would avoid hard feelings and perhaps a mess later on if the employee misses the deadline.