Are annual participant statements required to be sent to 401(k) partic

[pbarrett]

We are a TPA firm and presently prepare annual particpant statements for the participants in all of the 401(k) plans we administer along with SPDs and SARs. In addition, these same particpants are sent quarterly cash investment statements that reflect current market values.

The annual statements are run on a plan year basis, and reflect vesting etc. I was recently at a seminar and found that most of the TPAs have stopped the annual statement and only send the quarterlys. Our "document" is rather vague as to what the reporting requirements are.

What is really required. What do most TPAs send out?

Your thoughts would be appreciated.

[Guest]

Most TPA firms that I work with still provide an annual statement for their 401(k) plans, which does included vesting, but they also provide quarterly statements. You should follow what's in the document, but if it is vague, I think quarterly statements only would be adequate.

[alanm]

This issue is covered under ERISA section 1132. You are only required to give a statement to a participant annually if requested and you must provide it within 30 days of the request. As a matter of service, most TPAs and mutual fund companies provide a quarterly statement. Vesting is not required to be on the statement at all unless specifically requested by the participant.

[RCK]

As a plan sponsor, I agree with alanm. But I would add that quarterly statements are more important as a motivational tool than meeting a legal requirement.

I think that the situation is more interesting in situations where there is a voice response system and an Internet site. The participant has the ability to create an on demand statement through either one on these. Then is it cost effective to continue providing quarterly statements?