accuracy of participant statments

[k man]

there was an item that appeared in the benefitslink newsletter that says that participant account statements can contain a legend that says something like "Please review this report and notify us of any discrepancies within 60 days. After 60 days, corrections will be made on a current basis."

Is a policy like this permissable, particularly if the error was one made by the record keeper?

[Jon Chambers]

I've seen this type of language. Although it seems like the statement might be a relevant fact that the courts might consider in potential litigation, I would agree that nowhere in ERISA is there a clause that requires participants to promptly review statements and inform appropriate authorities of any errors. So the policy is probably not enforceable. But it still might be valuable, because it may encourage participants to review statements more closely, and inform their employers of potential discrepancies in a more timely manner, even if the strict terms could never be enforced.

[Guest rmeigs]

Jon has it right in my opinion. Not that much good in a court case, but it often does cause participants to take greater care to review their statements. Most issues never get to court, they get negotiated. This type of notation on the statement usually keeps the participant and/or plan sponsor from going back beyond a reasonable time in seeking compensation.

[david rigby]

Seems to me that you could be less precise (at least with respect to the 60 days) and make the "caveat" more useful.

How about something like, "This statement is subject to correction for errors and omissions. If you are aware of any needed corrections, please contact .........."

[Guest ERISAweasel]

Rick, you postulated that "This type of notation on the statement usually keeps the participant and/or plan sponsor from going back beyond a reasonable time in seeking compensation."

I guess I'm not sure what you mean by this. To the extent a participant's account is "short" due to an error, the Participant's accrued benefit has been improperly reduced and the participant is arguably entitled to be made whole. I don't see how a "reasonable time" enters into the equation.

[Richard Anderson]

I think the 60 day period for retro correction is reasonable. It's difficult (maybe impossible) for recordkeepers to go back to the past and fix mistakes and then carry forward through all the possible tranactions that have happened since the mistake (transfers, loans, dividends, distributions, contributions, etc.) I doubt if they have the capability to go back several years to fix a mistake and then produce corrected statements for those past years. I believe it's reasonable, after a period of time has passed, to forget trying to correct the past; and make a reasonable calculation of gain/loss on the mistake, and make the correction in the current period.