How must a 404(a)(5) Notice be delivered?

[ldr]

Hi to All,

If a 401(k) plan is on a platform like John Hancock, and JH produces the 404(a)(5) notice, how must it be distributed?  It's available on the participant's account page at JH.  Is it enough to tell the participants via an email or a written memo how they can access it themselves on their account page?  Or must the employer access it off the Plan Sponsor page, download it, and either distribute paper copies or email it to the participants?  Must this be done every quarter?

I am not picking on John Hancock - I could have used any platform provider - we just happen to have a number of plans with them.

Thanks for any information you can provide.  Yes I realize we should already know this and we are getting to the table late but better late than never!

 

[401king]

I believe the DOL has written guidelines for electronic delivery. Off my head, the employer has to be sure that that the employee can access the email account and checks it regularly; it must be a valid email; an election must be made for the employee to receive electronic disclosures; employee may change at any time; must be notified that the document is available electronically. Prob some that I'm missing. 

[ldr]

@401king - Thank you.  With that information I was able to find the DOL guidelines and several explanations of those guidelines.  One of them has the statement that "A plan administrator may also send, via electronic or paper mail, a link to the required information on a website".  That's going to be a lot more appealing than printing off and distributing a 13 page notice that nobody but the CFO will understand (and even that's not guaranteed!.

 

[RatherBeGolfing]

43 minutes ago, ldr said:

@401king - Thank you.  With that information I was able to find the DOL guidelines and several explanations of those guidelines.  One of them has the statement that "A plan administrator may also send, via electronic or paper mail, a link to the required information on a website".  That's going to be a lot more appealing than printing off and distributing a 13 page notice that nobody but the CFO will understand (and even that's not guaranteed!.

 

Unless you are leaving out a bunch of steps and just giving us the punchline "A plan administrator may also send, via electronic or paper mail, a link to the required information on a website", that is not going to satisfy the requirements for electronic disclosure.

 

[ldr]

@RatherBeGolfing - here's a 5 page explanation I found, and notice at the bottom of page 2, you will see the quote I gave.  The key seems to be setting up the electronic delivery itself to conform to all the requirements and once that is done, it appears that a plan sponsor can either transmit the document itself or point to where to find it on a website.  At least that's how I understood it. 

What are you doing about 404(a)(5) notices?  We weren't doing anything at all - well we know that's wrong.  So now we are trying to fix it.  I'd love to get it right the first time so please keep the ideas coming!

We are a non-producing TPA - i dotting T crossers - not investment people.  We are just trying to protect our clients and ourselves against future problems due to not having distributed something that either they or we or both should have been on top of, and we never depend on investment advisers to do anything at all.

A_Guide_to_Electronic_Delivery_of_Participant_Disclosure_Materials.pdf

[RatherBeGolfing]

13 minutes ago, ldr said:

@RatherBeGolfing - here's a 5 page explanation I found, and notice at the bottom of page 2, you will see the quote I gave.  The key seems to be setting up the electronic delivery itself to conform to all the requirements and once that is done, it appears that a plan sponsor can either transmit the document itself or point to where to find it on a website.  At least that's how I understood it. 

What are you doing about 404(a)(5) notices?  We weren't doing anything at all - well we know that's wrong.  So now we are trying to fix it.  I'd love to get it right the first time so please keep the ideas coming!

We are a non-producing TPA - i dotting T crossers - not investment people.  We are just trying to protect our clients and ourselves against future problems due to not having distributed something that either they or we or both should have been on top of, and we never depend on investment advisers to do anything at all.

A_Guide_to_Electronic_Delivery_of_Participant_Disclosure_Materials.pdf

Thats what I meant by the punchline.  You have to meet all the requirements for electronic disclosure before you even think of directing the participant to a website. 

Platforms are pretty easy to work with for the notices since they put it (the annual notice) together for you.  We download both the plan information part and the comparative chart and make it one pdf.  We send the pdf with instructions to the clients.  They deliver it to the participant either on paper or email the pdf if the electronic delivery requirements have been satisfied.  

The quarterly notice requirements are usually met by the platform since they add that information to their statements.

We are a non-producing TPA as well.  

[ldr]

@RatherBeGolfing, thanks again.  That clears up some confusion I had about whether this had to be done once a year or once a quarter.  I appreciate your comments!

[RatherBeGolfing]

No problem.  If you are an ASPPA member there are some good asap's on 404a-5, 408b-2, and the DOL electronic disclosure policy.  Just look at the archives for 2012 & 2013

[ldr]

Thanks.  I am an ASPPA member and I will look them up.  

 

[AATPA]

Don't forget about notifying eligible employees that do not have a participant account set up and won't have access to the custodian website.

[ACK]

The bottom line to the electronic disclosure of required notices is that it is very difficult to comply with the current rules.  The plan sponsor must be sure that employees have regular access at work to a computer that will let them access the info, or they can get  personal email addresses of the employees and email the link to that, but in order to do so the plan sponsor must have their consent and must make sure that the email addresses they have on file are kept current.  And then there are terminated employees who still have a balance in the plan who need to receive the notice.  As a nonproducing TPA, we do not get in the middle of this melee.  We will remind the employer that the notice is available on the vendor's website and needs to be distributed and give some info about what the requirements are for electronic distribution, but I really think the best course of action is for the employer to print off the notice and  mail it out/hand it out  and keep a copy of it in their plan files that is date stamped as to the date it was distributed.  

[DNA]

I apologize for being an idiot- but does everyone get this notice, or just plan participants? Not sure why people not participating would get this.... thanks

[RatherBeGolfing]

23 hours ago, DNA said:

I apologize for being an idiot- but does everyone get this notice, or just plan participants? Not sure why people not participating would get this.... thanks

Participants.  But for plan purposes, participant means anyone eligible to participate, even if they are not making contributions now.