Benefit Statements – DOL website

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Moving forward participant directed account quarterly statements require a reference to the Internet webite of the DOL for sources of information on individual investing and diversification.

I looked at the consumer information section under dol.gov/ebsa and did not see a topic for individual investing and diversification. Should I be looking somewhere else?

[Belgarath]

I had spent some time sifting through it yesterday, and had the same problem. The following is the closest I could find:

http://www.dol.gov/ebsa/pdf/savingsfitness.pdf

Hopefully, the DOL will provide some interim guidance, but in the absence of any, I'd like to think they'd be lenient on any reasonable attempt at good faith compliance.

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Belgarath,

Thanks for your replies. The information was helpful.

One more question regarding quarterly statements...when I read section 508 of PPA I concluded the explanation of permitted disparity would only be required for DB plans. However, when I read the footnote on page 121 of the JCT it appears the explanation would be required on quarterly statements for DC plans.

Are my assumptions correct??

[Belgarath]

IMHO, 508 doesn't have any exception on the permitted disparity disclosure for the individual account plans.

a) Amendments of ERISA-

(1) IN GENERAL- Section 105(a) of the Employee Retirement Income Security Act of 1974 (29 U.S.C. 1025(a)) is amended to read as follows:

`(a) Requirements To Provide Pension Benefit Statements-

`(1) REQUIREMENTS-

`(A) INDIVIDUAL ACCOUNT PLAN- The administrator of an individual account plan (other than a one-participant retirement plan described in section 101(i)(8)(B)) shall furnish a pension benefit statement--

`(i) at least once each calendar quarter to a participant or beneficiary who has the right to direct the investment of assets in his or her account under the plan,

`(ii) at least once each calendar year to a participant or beneficiary who has his or her own account under the plan but does not have the right to direct the investment of assets in that account, and

`(iii) upon written request to a plan beneficiary not described in clause (i) or (ii).

`(B) DEFINED BENEFIT PLAN- The administrator of a defined benefit plan (other than a one-participant retirement plan described in section 101(i)(8)(B)) shall furnish a pension benefit statement--

`(i) at least once every 3 years to each participant with a nonforfeitable accrued benefit and who is employed by the employer maintaining the plan at the time the statement is to be furnished, and

`(ii) to a participant or beneficiary of the plan upon written request.

Information furnished under clause (i) to a participant may be based on reasonable estimates determined under regulations prescribed by the Secretary, in consultation with the Pension Benefit Guaranty Corporation.

`(2) STATEMENTS-

`(A) IN GENERAL- A pension benefit statement under paragraph (1)--

`(i) shall indicate, on the basis of the latest available information--

`(I) the total benefits accrued, and

`(II) the nonforfeitable pension benefits, if any, which have accrued, or the earliest date on which benefits will become nonforfeitable,

`(ii) shall include an explanation of any permitted disparity under section 401(l) of the Internal Revenue Code of 1986 or any floor-offset arrangement that may be applied in determining any accrued benefits described in clause (i),

`(iii) shall be written in a manner calculated to be understood by the average plan participant, and

`(iv) may be delivered in written, electronic, or other appropriate form to the extent such form is reasonably accessible to the participant or beneficiary.

`(B) ADDITIONAL INFORMATION- In the case of an individual account plan, any pension benefit statement under clause (i) or (ii) of paragraph (1)(A) shall include--

`(i) the value of each investment to which assets in the individual account have been allocated, determined as of the most recent valuation date under the plan, including the value of any assets held in the form of employer securities, without regard to whether such securities were contributed by the plan sponsor or acquired at the direction of the plan or of the participant or beneficiary, and

`(ii) in the case of a pension benefit statement under paragraph (1)(A)(i)--

`(I) an explanation of any limitations or restrictions on any right of the participant or beneficiary under the plan to direct an investment,

`(II) an explanation, written in a manner calculated to be understood by the average plan participant, of the importance, for the long-term retirement security of participants and beneficiaries, of a well-balanced and diversified investment portfolio, including a statement of the risk that holding more than 20 percent of a portfolio in the security of one entity (such as employer securities) may not be adequately diversified, and

`(III) a notice directing the participant or beneficiary to the Internet website of the Department of Labor for sources of information on individual investing and diversification.

`© ALTERNATIVE NOTICE- The requirements of subparagraph (A)(i)(II) are met if, at least annually and in accordance with requirements of the Secretary, the plan--

`(i) updates the information described in such paragraph which is provided in the pension benefit statement, or

`(ii) provides in a separate statement such information as is necessary to enable a participant or beneficiary to determine their nonforfeitable vested benefits.

`(3) DEFINED BENEFIT PLANS-

`(A) ALTERNATIVE NOTICE- In the case of a defined benefit plan, the requirements of paragraph (1)(B)(i) shall be treated as met with respect to a participant if at least once each year the administrator provides to the participant notice of the availability of the pension benefit statement and the ways in which the participant may obtain such statement. Such notice may be delivered in written, electronic, or other appropriate form to the extent such form is reasonably accessible to the participant.

`(B) YEARS IN WHICH NO BENEFITS ACCRUE- The Secretary may provide that years in which no employee or former employee benefits (within the meaning of section 410(b) of the Internal Revenue Code of 1986) under the plan need not be taken into account in determining the 3-year period under paragraph (1)(B)(i).'

(2) CONFORMING AMENDMENTS-

(A) Section 105 of the Employee Retirement Income Security Act of 1974 (29 U.S.C. 1025) is amended by striking subsection (d).

(B) Section 105(b) of such Act (29 U.S.C. 1025(b)) is amended to read as follows:

`(b) Limitation on Number of Statements- In no case shall a participant or beneficiary of a plan be entitled to more than 1 statement described in subparagraph (A)(iii) or (B)(ii) of subsection (a)(1), whichever is applicable, in any 12-month period.'

© Section 502©(1) of such Act (29 U.S.C. 1132©(1)) is amended by striking `or section 101(f)' and inserting `section 101(f), or section 105(a)'.

[PPA §508] (b) Model Statements-

(1) IN GENERAL- The Secretary of Labor shall, within 1 year after the date of the enactment of this section, develop 1 or more model benefit statements that are written in a manner calculated to be understood by the average plan participant and that may be used by plan administrators in complying with the requirements of section 105 of the Employee Retirement Income Security Act of 1974.

(2) INTERIM FINAL RULES- The Secretary of Labor may promulgate any interim final rules as the Secretary determines appropriate to carry out the provisions of this subsection.

[PPA §508] © Effective Date-

(1) IN GENERAL- The amendments made by this section shall apply to plan years beginning after December 31, 2006.

(2) SPECIAL RULE FOR COLLECTIVELY BARGAINED AGREEMENTS- In the case of a plan maintained pursuant to 1 or more collective bargaining agreements between employee representatives and 1 or more employers ratified on or before the date of the enactment of this Act, paragraph (1) shall be applied to benefits pursuant to, and individuals covered by, any such agreement by substituting for `December 31, 2006' the earlier of--

(A) the later of--

(i) December 31, 2007, or

(ii) the date on which the last of such collective bargaining agreements terminates (determined without regard to any extension thereof after such date of enactment), or

(B) December 31, 2008.