Upcoming changes to Summary Annual Report

One of the new items in the SAR model language is the following statement:

“Your plan is a [insert a brief description of the plan based on the plan characteristic codes listed for the plan on the Form 5500, including whether it is a defined contribution or defined benefit plan, and whether the plan is a pooled employer plan, another type of multiple-employer plan or a single-employer plan].”

How are you approaching this?  Does this mean that we need to list out every individual 5500 characteristic code description (or some version of them) as part of this? 

The rule’s form [29 C.F.R. § 2520.104b-10(d)(3)] suggests a few clues:

The instruction says the description should be “brief”.

The form suggests that what follows “Your plan is a” might fit one sentence.

The instruction directs that the description must include (i) whether the pension plan is a defined benefit plan or an individual-account plan, and (ii) whether the plan is a multiemployer plan, a single-employer plan, a pooled-employer plan, or a multiple-employer plan other than a pooled-employer plan.

The instruction suggests the description should be logically consistent with the to-be-summarized report’s plan characteristic codes.

The instruction does not say the description must include all information from all plan characteristic codes. (That’s good because one individual-account pension plan might have as many as 19 codes. Expressing all that information might be more than a “brief description” the Labor department envisioned.)

Here’s one illustration (for a plan with a § 401(k) arrangement, but no nonelective or matching contribution):

Your plan is a single-employer individual-account retirement plan that requires participant-directed investment.

That sentence meets required elements, and adds an extra fact that can be logically consistent with a few plan characteristic codes.

Or here’s another illustration:

Your plan is a multiple-employer association retirement plan that provides an individual account for each participant or beneficiary.

BenefitsLink neighbors might have many more ideas.

And I would not be surprised if software logic and constraints result in a description that chops phrases and sentences, and omits information that’s not strictly necessary.

We use FT William for 5500 software. They are excellent on this type of thing, and I am hopefully anticipating that they will develop programming to appropriately populate the SAR based on the 5500 information/codes that we input. I'd hate to have to mess around with figuring it out for myself! 

I mean the same langauge shows up for each code so I assume this is relatively simple to program for.  For me the bigger problem is the SAR will now be two pages!

Informal poll:

Of participants and beneficiaries in your clients’ plans, what portion get routine deliveries of disclosures by electronic means?

_____% electronic means

_____% still get paper.

And how many of your clients’ plans charge an individual’s account for getting paper statements and other disclosures?

_____% charge an individual’s account an incremental amount for getting paper.