Summ Ann Report

[austin3515]

So the DOL Regs, and EOB both say essentially "All participants must receive the SAR."  

We have always interpreted this to mean all active/eligible employees plus any terms with balances determined as of the last day of the plan year.

But I can;t seem to find anything that says that excplcitly.  What do people think?  Do you know of anything more specific? 

[justanotheradmin]

A more conservative approach would be to give it to anyone who was active and eligible at any poitn in the year (even if terminated w/o a balance at year ). as well as any terminated participants who had a balance at ANY point during the plan year, even if zero balance at year end. 
That's based on the fact that the A in SAR stands for Annual, so anyone who was part of the plan during that Annual period I would think should be included. 

BUT: I don't have a cite to support that conservative approach. 

Nor is it terribly practical . If I had some eligible employees who left during the year and never had an account balance, am I (plan sponsor) really going to send them the SAR? Probably not. 

[RatherBeGolfing]

§ 2520.104b-10(a)

Quote

Except as otherwise provided in paragraph (g) of this section, the administrator of any employee benefit plan shall furnish annually to each participant of such plan and to each beneficiary receiving benefits under such plan (other than beneficiaries under a welfare plan) a summary annual report conforming to the requirements of this section. Such furnishing of the summary annual report shall take place in accordance with the requirements of § 2520.104b-1 of this part.

...shall furnish annually to each participant of such plan and to each beneficiary receiving benefits under such plan...

If there is no balance, there is no participant or beneficiary.  I don't have a copy of the 5500 preparer's manual anymore, but I know that one of the prior editions said that there was no SAR requirement for a terminee who was paid before the end of the plan year. 

12/31/2018 plan year

Participant paid out 12/30/18 - no 2018 SAR required(12/31/18 is a toss up for me)

Participant paid out 1/1/2019 - 2018 SAR required.

[austin3515]

Left scratching my head, how could this not be clear cut??

[Luke Bailey]

Austin3515, perhaps it's not clear cut because there seems to be little employee interest in or DOL enforcement of the SAR rules.

[austin3515]

I guess I don;t disagree with you, but nevertheless it's odd that something so simple isn't clear as day.

[Luke Bailey]

For what it's worth I would have thought that the 5500 definition of participant applied, so eligible without account would get. But just guessing. Since they MIGHT contribute in future, they could have an interest in knowing how existing assets managed.

[RatherBeGolfing]

1 hour ago, Luke Bailey said:

For what it's worth I would have thought that the 5500 definition of participant applied, so eligible without account would get. But just guessing. Since they MIGHT contribute in future, they could have an interest in knowing how existing assets managed.

Eligible without an account balance is required to receive the SAR, no question about that.

What isn't 100% clear is whether a terminated participant who has been paid out before the end of the plan year is required to receive the SAR.   Standard practice seems to be term with no balance at the end of the year does not get an SAR, but it sort of depends on where you draw the line.  The regs just say participant and beneficiary.  Many interpret that as "at the end of the year" rather than "at any point during the plan year".  I know Janice Wegesin's 5500 Preparer's Manual agreed with the former but I don't think it had a direct citation.  Absent anything directly on point, I think either interpretation is reasonable.

[BG5150]

What about a plan termination where there are no more employees?

[RatherBeGolfing]

7 hours ago, BG5150 said:

What about a plan termination where there are no more employees?

Should be treated the same as terminated and paid out participant.  I believe the 5500 Preparer's Manual had a note about terminating plans where assets transferred to another plan, saying that an SAR would be prudent in that case, but no SAR requirement for a terminated plan with no assets left.

I have an older copy of it somewhere but an office move can make anything disappear  

[BG5150]

I find it odd that people who are eligible for a plan but have no account must get an SAR, but someone who may have been an actual stakeholder for 1, 3, 7, 11 months then cashed out doesn't get one.  Especially, if the plan terminates and there is nothing left at all.