Participant Disclosure under PPA

[msmith]

Regarding participant directed loans - If a Plan limits loans to one loan at a time, hardship only, from deferral source only, and on and on, is this considered an investment restriction? Also, what about participant directed loans that are not illustrated on the quarterly statements provided by the Recordkeeper (TPA reconciles loans at the end of the Plan Year). If these loans are attached to a Plan that requires quarterly statements, do you feel that we would have the update the loans on a quarterly basis, or just provide the last available data?

Combination plans, where the deferrals are individually directed, but the profit sharing assets are commingled in a Trustee directed account - We have several of this sort and they have up to 10 accounts, with several pages of investments. Does anyone have a good method of providing this data on the quarterly statements?

All comments are welcome.

[Guest Guest99]

After attending a Sungard Corbel seminar about Participant Forms and Notices, it was everyone's understanding that interim valuations are not required when reporting information quarterly. The Technical Explanation of PPA states that the 7 items required to be disclosed (accrued benefit, vesting, explanation of permitted disparity, value of each investment, restrictions on investment, diversification notice and DOL website) must be done "on the basis of the latest available information". If I'm a TPA that does balance-forward valuations, then my latest available information will be as of the last annual valuation date. Therefore, I would say that you would not be required to reconcile loan balances quarterly. However, I would indicate in the notice that the loan value provided is as of the last valuation date.

As far as the value of each investment is concerned, unless the participants have internet access to the accounts or receive monthly/quarterly statements from a broker, you really don't have a choice but to list the investments in each participant's account with the latest value (again, no interim valuation is needed). If the participants do have internet access or receive paper statements, then an additional notice or two needs to be prepared. Only one is needed if the particpants are going to get paper monthly/quarterly statements sent to them from the broker (multiple source or documents notice disclosing how and when the information will be provided to participants). Two notices will be needed if the participants have internet access to their accounts. The first will be the multiple source or document notice. The second notice will explain the availability of the information, how it can be accessed and the participants right to obtain, free of charge, a paper copy of the information.

I can only assume that the hardship loan is not an investment restriction but I have nothing to back up that statement.

I hope everything else helps.

[J Simmons]

I know that the day that FAB 2006-3 was issued and it was first explained that the notices for a quarter would not be due until 45 days after the quarter ends, a practitioner wrote the DoL officials listed as contacts re the FAB asking if the 45-day leeway was being allowed to give time for preparation because a valuation date in the quarter was required. That was almost 5 months ago and those DoL officials have not yet responded--so it is possible the issue of what valuation date is required is yet the matter of internal discussion at DoL.