Participant Account Statement at Termination of Employment

[waid10]

Hi. What type of participant disclosure or account statement is required at termination of employment? We provide annual individual account statements to our plan participants. We distribute these statements at the beginning of July. My question is this: if a participant terminates employment, say in September, do we need to provide an updated account statement to the participant? Or can we rely on the annual account statement that we provided to the employee a few months prior? Does the answer change if the plan is a DB plan versus a DC plan?

Thanks for any guidance on this.

[BG5150]

I'm guessing this DC plan is all in a pooled account, or that the participants do not have investment direction?

[waid10]

I'm guessing this DC plan is all in a pooled account, or that the participants do not have investment direction?

It's a DB plan.

[BG5150]

Oh.. this threw me off.

Does the answer change if the plan is a DB plan versus a DC plan?

[david rigby]

When (or if) the participant ever gets put on a Form SSA, he/she must also be given a statement describing that deferred benefit (DB or DC). See IRC 6057(e). Note that certain information is required for this purpose, which may not have been included on a previous statement.

[waid10]

When (or if) the participant ever gets put on a Form SSA, he/she must also be given a statement describing that deferred benefit (DB or DC). See IRC 6057(e). Note that certain information is required for this purpose, which may not have been included on a previous statement.

So, are you saying that at termination of employment, there is no requirement to provide an account statement? And that the annual statement showing the participant's account balance as of January 1 and the interest credits for the year satisfies any legal requirements?

[david rigby]

So, are you saying that at termination of employment, there is no requirement to provide an account statement? And that the annual statement showing the participant's account balance as of January 1 and the interest credits for the year satisfies any legal requirements?

No, I did not say that. Check the statute and regs to identify what is required on the 6057(e) statement, and when.

[Guest kim5500]

See DOL Prop. Reg. 2520.105-2(b)(1)]. The general rule for single-employer retirement plans is to furnish a benefit statement within 180 days after the end of the plan year in which the participant terminates service with the employer. The statement must report benefits on a date no earlier than the date of termination.