436 Notice Required?

[Penman2006]

If a plan sponsor handed out a Section 436 participant notice regarding benefit restrictions last year, and this year the funding status has not changed enough to change the restriction, is another participant notice required?

The notice last year did not mention anything about an annual update.

[Blinky the 3-eyed Fish]

Nobody knows. I would issue the notice though.

[Andy the Actuary]

A fundamentalist reading of the proposed regulations would say "no," though as Sir Blinkiford commented, the safe-road is to issue the notice.

The problem of not reissuing is to make sure you issue the notice to new participants, beneficiaries, alternate payees, etc. If the Plan is a large plan, the notice could be distributed with the Annual Funding Notice, though there must be some section of ERISA that proscribes providing in a single distribution both meaningful and meaningless communications

[Effen]

FWIW, I completely agree with Andy that "A fundamentalist reading of the proposed regulations would say 'no'", but I stop there and say, ok, then NO it is.

Personally, I don't really have enough time to do the AFTAP Certs, Benefit Restriction Notices, Annual Funding Notices, and PBGC premiums that all seem to be due on 4/30, so I'm not going to waste time doing additional notices just to be on the safe side.

Does anyone really think the IRS will have a leg to stand on if they decide to prosecute someone for not giving a second notice? They will have much bigger issues to deal with.

[AndyH]

Bravo.

But you forgot new quarterly contributions and Forms 10 for 2 life plans.

[Blinky the 3-eyed Fish]

Oh don't get me wrong. As a small plan actuary I agree PPA is craPPAy. My thinking is it covers any new entrants who the plan sponsor would sure forget to give the notice to. And it takes about 30 seconds to take the previous letter and notice and change the date.

[tymesup]

Let's not forget the value of giving the Plan Administrator something else to do. Let's also not forget the value of reminding participants of what the plan is not giving them.

Perhaps plans that are not subject to restrictions could issue a notice that says we are well-funded, none of these restrictions apply to our plan.