PPA Quarterly Statements

[Guest tas1]

With March 15th behind us, we are focusing intensely on the new statement requirements. I received the following email from John Hancock which seems to imply that plans on these types of platforms will not have to address the vesting requirement UNTIL 02/14/08. Is this correct? - certainly would be wonderful news! And/or, is anyone doing a notice, based on DOL 2006-3, explaining that this info will come at a later date? We've got a variety of platforms, LOTS of individual brokerage accts (yikes!) and a few pooled, self-directed plans (most doing quarterlys anyway so NBD). Our brokerage account clients are not going to pay for quarterly vals and a separate statement stating one's vested % is really useless when all money types are comingled in one account. I would really appreciate thoughts about this item from JH and how others are dealing with this issue. Thank you!!

From a John Hancock email:

"The PPA requires that a “quarterly benefit statement include the total

benefits accrued, the vested benefit or the earliest date when a

participant will be vested.†In the case of a plan with a calendar plan

year, if the vesting information is to be made available on a quarterly

benefit statement, the information will have to appear on the statement for

the quarter ending March 31, 2007. The DOL requires the plan to provide a

statement to their participants 45 days after quarter end.

As an alternative, the plan may provide the vesting information in a

separate annual statement that enables a participant to determine their

vested benefit. If the annual statement method is used, these plans will

have until February 14, 2008 (i.e., 45 days after December 31, 2007) to

deliver the vesting information to their participants.

For 2007, John Hancock will be supporting the annual statement option. We

understand that some of you already provide vesting statements to plan

sponsors and participants and may choose to continue to do so. For those

who are not, if you are looking to John Hancock for assistance, we will be

collecting vesting data from you and providing annual vesting statements to

plan sponsors to distribute to participants. Additional details on the

process to provide us the vesting data will follow."

[Jim Chad]

The mailing from Ameriprise and the mailing from Corbel both matche my understanding. If the Participant can direct investments, we have 45 days after March 31, 2007 for a calendar year Plan.

[Guest tas1]

The mailing from Ameriprise and the mailing from Corbel both matche my understanding. If the Participant can direct investments, we have 45 days after March 31, 2007 for a calendar year Plan.

I emailed John Hancock and they stand by their opinion that vesting can be supplied on one separate annual notice. AND, the email response they sent me (see below) includes their supporting response from TAGData. Any thoughts or opinions on this would be greatly appreciated. It would be welcome news but we just haven't heard this from anyone else... and the clock is ticking! Here's the response I got from JH (sorry for all of the funky characters) -

EMAIL FROM JOHN HANCOCK:

"We have reviewed the PPA requirements and specifically,  DOL FAB

2006-03. Our interpretation is that the vesting requirement can be met in

one of two ways. It can be reported on the quarterly participant statements

OR it can be reported on a separate notice on an annual basis. Our approach

will be to create a separate document on an annual basis. I also went to

TAG to get their opinion and they agree with our interpretation. Here is

the response that I received.

"I don't interpret FAB 2006-03 to require vesting information on the first

 quarterly statement.  The Act itself requires vesting to be included on

 the participant statement (or otherwise provided to the participant) only

 once annually, not on each quarter's statement. The Technical Explanation

 to PPA 2006 provides the following:

 "With respect to information on vested benefits, the Secretary of Labor

 is required to provide that the requirements are met if, at least

 annually, the plan:

 (1) updates the information on vested benefits that is provided in the

 benefit statement; or

 (2) provides in a separate statement information as is necessary to

 enable participants and beneficiaries to determine their vested

 benefits"."

xxx (I xxx'd the name because I wasn't sure if it was proper etiquette to share it)

AVP, TPA Services

John Hancock Retirement Plan Services

601 Congress Street, 11- 049

Boston, MA 02210-2805"

617-663-2691

[Bird]

I agree (with John Hancock) that vesting info can be provided once per year, and that the first time it would be necessary to do so would be by 2/15/08 for 2007. But vesting is the only thing that can be done once a year and it's not clear to me if John Hancock will be covering all the other yada-yada in their statements, which might mean that some sort of supplementary quarterly statement will be required.

[Bird]

I just got and read their e-mail and I think they're handling it appropriately wrt both vesting and the other requirements; they're modifying their statements to include investment principles, reference to DOL website, limitations on exchanges, etc. They are understandably NOT doing anything about permitted disparity or floor-offset commentary.

One thing that caught my eye is that if use "multiple documents" (i.e. we issue a separate statement on permitted disparity), that's ok, but we're supposed to notify the participants BEFORE they get the quarterly statement. Which means we're under a little more time pressure than I originally thought to get out our "supplementary" statements or whatever you want to call them.

[austin3515]

Bird, I'm looking at FAB 2006-3 "Form of Furnishing Statements" paragraph 3, and the only requirement I'm seeing regarding the multiple source notification is that it has to be "furnished in advance of the date on which a plan is required to furnisht the first pension benefit statement..."

I'm interpretting that to mean we have until 5/15/07.

Also, I'm incorporating the "multiple sources" language into my supplemental notice. Any thoughts on that?

[blue]

Read the Sunguard Technical Update - Quarterly Benefit Statements issued March 1, 2007 (www.relius.net/news/technicalupdates.asp?ID=35&T=P)

What you are proposing appears to be in line with the examples they have outlined as to the deadline for the supplemental notice (May 15, 2007).

They do, however, they state the "one-time" notice explaining multiple documents must be provided in advance of May 15, 2007.

[Bird]

austin3515, I agree with you that the FAB doesn't say the supplemental notice has to be given before the "regular" benefit statement. John Hancock said that but I see nothing to support it.