PPA Quarterly Statements

[imchipbrown]

I've set up a lot of 401(k) Plans that give each participant their own brokerage account, be it Schwab, Morgan Stanley, etc. The accounts are titled in the name of the plan FBO the participant. The participant invests as (s)he sees fit.

Monthly statements go to each participant's home, as well as to the trustee and the TPA.

I can see some merit in the required DOL safe harbor statement regarding diversification and furnishing the link to their website. I have a big issue with furnishing what is essentially a boiler-plate notice QUARTERLY. It strikes me as entirely paternalistic, time and tree wasting. Change your underwear, don't talk to strangers, look both ways and diversify! QUARTERLY?

Does anyone administer this type of arrangement and have an artful way of selling this need to the sponsor (other than the DOL says you have to)?

Does anyone stick this stuff on the Summary Annual Report for non-participant-directed plans?

[J Simmons]

[A]n artful way of selling this need to the sponsor (other than the DOL says you have to)?

If the plan imposes a vesting requirement, then maybe these quarterly statements specifying the vesting status as of the end of the most recently completed plan year puts the employees on notice of what the plan administrator's records show that vesting status to be, and perhaps quells complaints that would otherwise later come at the time of distribution.

Since the plan permits participant direction, these quarterly statements make it more difficult for an employee who is frowny face due to investment underperformance claim he did not understand the option and rules for directing investments, or that the plan administrator should have done more to notify him of them.

Then there is always trying to get some traction in the employee relations sphere by pointing out that the employer can emphasize to the employees that although a burdensome task, the employer regards it as important that it provide these quarterly statements to make sure that employees understand how important diversification is to their retirement security. 'Burdensome, yes. But the right thing to do for employees, no doubt.'

Does anyone stick this stuff on the Summary Annual Report for non-participant-directed plans?

Good idea, provided nothing in the guidance on either SARs or the quarterlies prevents them from being included in a single notice. (I haven't looked into the issue, so I do not know. Definitely worth taking a look.)

[Bird]

We have some of these and do provide a boilerplate quarterly notice. Another area where there is widespread noncompliance, no doubt.

Does anyone stick this stuff on the Summary Annual Report for non-participant-directed plans?

What "stuff"? If we're still talking about the diversification requirements, etc., no. We do provide the equally irritating and useless list of assets though (for non-participant directed plans).