"Annual" 401(a)(5) Notices

[BG5150]

So, after this go 'round, when are the next "annual" notices due? What does "annually" mean in this case? Plan year? Calendar year?

Would the next one be due by Aug 30, 2013?

What if the ER gives them out again in January 2013; would the one after that be due a year from that?

[Belgarath]

At least once in any 12 month period. So you can stagger them to smooth out the workflow, as long as you don't go more than 12 months between them. More often is fine!

[Bird]

I saw one of my platforms say that the next one was due within 2 months of Jan 1, 2013...but I don't think that's right. Was hoping/planning to revisit it annually in the summer.

[ETA Consulting LLC]

Annually could mean:

Once in a rolling twelve month period;

Once within each designated 12 month Year (i.e. Plan Year or Calendar Year) regardless of when.

I don't know, but it's a good question. Can you meet the requirement by disclosing January 2013 and November 2014 (satifying the requirement under a once inside each calendar year) without being limited to a date specific requirement within each year?

I would like to think so, but it doesn't appear to be any guidance on what 'annually' means.

Do we have a cite that address this?

[John Feldt ERPA CPC QPA]

I would prefer to interpret that as any 12 month period, such as calendar year or plan year. However, and maybe I heard it wrong, but I thought a DOL official made some statement that it needs to be no more than 12 months after the prior disclosure.

That could present issues when taking over a plan. Part of the takeover process needs to determine when the last 404(a)(5) notices were given out.

[Belgarath]

Note the "any" - barring further "clarification" from the DOL, I'd say you can't go more than 12 months.

(h) Definitions. For purposes of this section, the term—

(1) At least annually thereafter means at least once in any 12-month period, without regard to whether the plan operates on a calendar or fiscal year basis.

(2) At least quarterly means at least once in any 3-month period, without regard to whether the plan operates on a calendar or fiscal year basis.

[MoJo]

I would prefer to interpret that as any 12 month period, such as calendar year or plan year. However, and maybe I heard it wrong, but I thought a DOL official made some statement that it needs to be no more than 12 months after the prior disclosure.

That could present issues when taking over a plan. Part of the takeover process needs to determine when the last 404(a)(5) notices were given out.

I would agree with the "12 month" rule - although for no reason other than consistency is better than inconsistency. We are "debating" now how best to do so (next August (unlikely), consistent with other notice distributions (safe harbor, QDIA, etc., "possible, but would have seriously lagging investment information"), staggered (extremely unlikely), or at some other point in time - but that entails possibly duplicative annual disclosures (if we have to adhere to the 12 month rule) to "get us on the right cycle." The problem we have is that as a non-producing/consulting TPA, we deal with 78 different fund companies, all of which may also be on different schedules as well (and some of which tend to not keep us in the loop - having distributed their piece to plan sponsors in advance of ours, requiring a second distribution and lots of angst and confusion - if not outright anger).

I think what we would like to see is a schedule that allows distribution as part of one of the quarterly participant statements - but that (for us) would entail a significant amount of coordination with those disparate fund companies.

[ETA Consulting LLC]

Note the "any" - barring further "clarification" from the DOL, I'd say you can't go more than 12 months.

(h) Definitions. For purposes of this section, the term—

(1) At least annually thereafter means at least once in any 12-month period, without regard to whether the plan operates on a calendar or fiscal year basis.

(2) At least quarterly means at least once in any 3-month period, without regard to whether the plan operates on a calendar or fiscal year basis.

I appreciate your position, and that works perfectly for you. They could've said a "rolling 12 month period"; or is that what we are interpreting "in any" to imply? A rolling 12 month would create a condition of no flexibility where you'd have to create an 11 month cycle. Suppose you send it out on June 30, 2013 and again on July 1, 2014. You would've clearly violated the rolling 12 month period; thereby tying yourself to create a buffer each year. If you are allowed to subsequently choose (any consistent 12 month timeframe), then you have the flexibility to choose either calendar year, plan year, or any other 12 month timeframe to base the period during which you'd meet the requirement.

So, that leaves us back to my original question.

[Tom Poje]

perhaps the answer is found in the preamble (p49) or the actual cite (page 98/99)

of course, this may require a translator.

preamble:

A number of commenters on the interim final rule requested that the Department better align this timing requirement with existing reporting and disclosure standards. For example, service providers currently must furnish information necessary to complete the Form 5500 Annual Report no later than 120 days after the end of the plan year. The Department is persuaded that the timing requirement for this reporting and disclosure information should be based on the reporting or disclosure requirements in question, rather than on the time that a responsible plan fiduciary chooses to request the information. Accordingly, paragraph ©(1)(vi)(B) now requires that such information be furnished reasonably in advance of the date upon which such responsible plan fiduciary or covered plan administrator states that it must comply with the applicable reporting or disclosure requirement, unless such disclosure is precluded due to extraordinary circumstances beyond the covered service provider's control, in which case the information must be disclosed as soon as practicable. The Department believes that this modification will address commenters’ concerns.

[ETA Consulting LLC]

of course, this may require a translator.

You think???

Either a tranlator or a mind reader. I wonder what the person who wrote this was thinking

[Tom Poje]

I think there are 65 words in that sentence, but I fell asleep trying to count them.

[Belgarath]

Hey Tom - I'm guessing perhaps you didn't mean to attach a 408(b)(2) disclosure? Does it change your answer any?