Participant Benefit Statements

[Guest Pennysaver]

Does anyone know when the DOL intends to issue the model participant benefit statements that it was supposed to issue by 8/17/2007 with respect to the increased reporting requirements under Section 105 of ERISA, as amended by PPA 2006?

Also, for those of you preparing the participant benefit statements for trustee-directed plans where the participants have undivided interests in the plan assets, are you including "the value of each investment to which assets in the individual account have been allocated", or are you simply applying the participants' respective undivided interest percentages to the total asset value in the plan, without breaking that out into each separate investment (which sometimes could be dozens, or even hundreds)?

Thanks!

[Bird]

Does anyone know when the DOL intends to issue the model participant benefit statements that it was supposed to issue by 8/17/2007 with respect to the increased reporting requirements under Section 105 of ERISA, as amended by PPA 2006?

Apparently never.

Yes we are including a list of assets (for the whole plan). I didn't follow the last part about the percentages, but if you are asking if it is ok to simply say "you have 9.51% of the assets in the plan", then no, I don't think so.

[ESOP Guy]

Here we give a list of the assets.

We have a Trustee directed MPP that is an audited plan. Each part gets a copy of the auditors attachment that lists the assets. For other clients everyone gets a photo copy of the 12/31 brokerage statement for the plan.

For a client that has many brokerage accounts they get a better part of an inch of paper each year.

it is goofy but appears to be the safest way to know you meet the rules.

[austin3515]

I had thought many people concluded that until the DOL came out with some guidance on this ridiculous requirement that we had some lee-way? Come to think of it, I just went through a DOL audit for a pooled plan and this did not even come up...

[austin3515]

http://benefitslink.com/boards/lofiversion...php/t47953.html

Funny, a lot of the same people responded. Bird, because the DOL was supposed to issue some guidance on this and never did, do you still feel the same way you did?

Just curious... These pooled plans have a tendency to invest in individual securities which makes the statement requirement a bit onerous - and ridiculous.

[Bird]

Yes, we are still doing it. As I noted in the other thread, we reconcile everything and creating the list isn't that hard.

[austin3515]

(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.

What about this though (which Bird mentioned)? We were promised assistance with this and the DOL has not been forthcoming. Are these disclosures being made by the public at large?

(FYI, we've been doing this, begrudgingly... I knew we were not the only ones, but I have this nagging suspicion that we're in the minority).

[ESOP Guy]

For what is worth Austin I agree with you. The lack of guidance is bad. The idea you have to list each and every stock and bond the plan owns is so silly it is hard to believe that is the intent of the rule. But what Bird is saying strikes me as the safest route.

We sometimes when the amount of paper gets large and the client objects we give a simple list of the assets broken down in the 5500 categories, ie $xxxx in corporate stocks, $xxxx corporate bonds……

My GUESS is if we ever get rules on this it will look something like that, not we have 100 shares of IBM, 100 shares of Google…..

But for now most of clients get a list that say the plan has 100 shares of IBM, 100 shares of Google.

As I have said before to keep the work to a minimum we often times make copies of the 12/31 brokerage statements list of holdings.

[Bird]

A few more thoughts/comments...

the idea, of course, is to let participants know the risk exposure in their plan, and it's not so silly in theory. In practice, I seriously doubt that one of "my" participants has given it a moment's thought. And frankly, I wouldn't do it myself, and I'd put my obsessive tendencies up against almost anybody's.

I used to bring this up at ASPPA GAC meetings, and it was never a priority. I don't recall ever hearing that DOL even had it on its project list.

Now that it's come up again, I think I'll write to my congressman and have a little fun with it.

[austin3515]

I agree that it's not silly. As a participant, there is certainly value in knowing at a minimum the breakdown between stocks and bonds, especially if you have, say $100,000 in the plan? I think this gets to ESOP Guys comments about reporting the total by category. Frankly it wouldn't bother me as much if this was the requirement because it is steeped in application and logic.

[K2retire]

...steeped in application and logic.

Logic? Isn't that against all sorts of regulations?

[Guest Pennysaver]

Yes we are including a list of assets (for the whole plan). I didn't follow the last part about the percentages, but if you are asking if it is ok to simply say "you have 9.51% of the assets in the plan", then no, I don't think so.

Not quite, and I agree that wouldn't quite suffice. What I meant was whether it would suffice to simply provide the dollar amount of the plan's assets attributable to the participant, without breaking out each separate investment in the pooled trust and listing a specific dollar amount attributable to each of those separate investments?

A pooled trustee-directed trust is not the same as a trustee-directed trust where some or all of the participants have individual accounts. There appears to be support for this approach in the statutory construction of Section 105(a)(1)(A)(iii) of ERISA, as discussed at this earlier BenefitsLink thread: http://benefitslink.com/boards/index.php?showtopic=34702

P.S. That earlier statutory analysis is discussed between J Simmons and Bird.

[austin3515]

"A pooled trustee-directed trust is not the same as a trustee-directed trust where some or all of the participants have individual accounts. There appears to be support for this approach in the statutory construction of Section 105(a)(1)(A)(iii) of ERISA, as discussed at this earlier BenefitsLink thread:"

But if the money was in a John Hancock/Great West style platform sending out quarterly statements wouldn't they already be providing the required information?