Summary Annual Report

[Lori Friedman]

If the current value of plan assets is less than 70% of the current liability under the plan, the percentage must be disclosed in the SAR [ERISA Sec. 104(b)(3)]. I could use some technical guidance:

1. Is the percentage reported as "Additional Information", or is it disclosed in another section of the SAR?

2. The DOL regulations don't seem to prescribe any language for this disclosure. Can anyone suggest how the disclosure might be worded?

[Guest Dell]

Lori:

I do not think it should be reported on the SAR.

As you stated, the regulations for the SAR do not mention this requirement, just as they do not require the provision of the other schedules required by 104(b)(3) - assets & liabilities or the schedule of receipts and disbursements.

The requirement to provide these schedules, and the 70% disclosure (which is in Sch B) have been replaced by references in the SAR informing the participant where he/she may obtain or review the schedules or the actuary's report.

It seems to me, the regs replaced the requirements of 104(b)(3) with the "plain language" financial information, disclosure of minimum funding status, and references where to obtain the actual schedules and actuary report.

I have never seen the 104(b)(3) requirements actually transmitted to participants w/ the SAR.

[Guest Dell]

Lori:

I thought about this some more and felt my above response was a little short on the reasons the info should not be included in the SAR.

Technically, the info you asked about is only required if you are filing the annual report under the "statutory method", which I have never seen anyone use. Under the alternative method, the regulations at 2520.103-1(a)(2) come into play and they specifically refer to the SAR requirements at 2520.104b-10.

[Lori Friedman]

Dell, thank you for providing such thorough and scholarly information about a rather esoteric subject. I really appreciate your help.