Summary Annual Report and Right to Receive Benefit

We use ftwilliam.com to produce our 5500's and Summary Annual Reports. In the General Information section of the SAR checklist, question 5 asks "Have all participants earned the right to receive benefits?" If you answer yes, it removes the "although not all of these persons had yet earned the right to receive benefits" language.

We're not sure how to answer this from a defined contribution plan perspective. Is this tied to whether or not everyone is fully vested, whether or not everyone is entitled to take a distribution from the plan, whether or not all of the participants listed in the count earlier in the sentence have a balance, or some combination thereof? If it's tied to whether or not everyone is entitled to actually take a distribution, it seems like there would be very limited circumstances when you would not include the language.

It's interesting that ftwilliam.com gives the option to include or exclude this language when the model notice in the DOL reg (§2520.104b-10) hard codes the language (i.e., doesn't provide for alternative language or qualify when you would or wouldn't use it like it does for other parts of the notice).

I'm inclined to just follow the model notice and include the language in all cases, but I'm curious as to what criteria others are using to determine how to answer this question?

Have all participants earned the right to receive benefits (that is, other than the passage of time, if everybody stopped working and no increase in vesting was required due to a partial termination,  will all participants be able to receive a distribution from the plan)?

So Mike, you're saying if every one in the number listed earlier in the sentence has a some kind of vested balance in their account, you would answer yes and not have the "although not all of these persons had yet earned the right to receive benefits" language on the SAR, right? Would you still answer yes if any of those in the number had no balance at all (i.e., eligible participant who hasn't deferred or received an employer contribution) even though they might have years of vesting service under their belt?

Right.

No.

Is either answer inconsistent with my  prior description?

Nope, just wanted to clarify that you're looking at it from a vested balance standpoint as opposed to whether or not everyone had some level of vesting service. What you've said makes sense.