Running a defined contribution (DC) plan like a 401k or 403b under ERISA is complicated with lots of required notices when employees become eligible with some required every year. Though most companies rely on their record keeper, TPA or advisor to help, it does not relieve them of the responsibility or liability if notices are not sent out. With 2017 plan year looming, what are the required notices for DC plan participants?
A national record keeper has provided a checklist of the who, what, when and how for annual DC notices which include:
- Traditional Safe Harbor
- Contingent Safe Harbor
- Follow-up Safe Harbor
- Eligible Automatic Contribution Arrangements
- Automatic Contribution Arrangements
- QDIA (default options)
The “who” is which employees must receive the notices; the “when” are the timing of the notices; the “what” is the content; and the “how” is the format in which they must be delivered. The checklist includes links to other documents which go deeper on each subject.
Some plans are starting to create videos for notices as 59% of all executives would rather watch a video than read text with a 200-330% increase in click-throughs on emails that contain them. It might also be cheaper.
As an example, here’s the checklist for QDIAs:
| Timing | Recipients | Content | Delivery Method |
| At least 30 days before the first day of the plan year. | All participants and beneficiaries who may have assets defaulted in a QDIA | Must be written in a manner calculated to be understood by the average plan participant. Fee and expense information may be provided in a separate document furnished simultaneously with the QDIA Notice. May be combined with: · Traditional ADP/ ACP Safe Harbor Notice · Traditional ADP/ ACP Safe Harbor Contingent Notice · QACA Notice · QACA Contingent Notice · EACA Notice. | May be provided in writing or electronically, in accordance with either DOL electronic media rules or IRS electronic media rules. DOL permits certain notices to be provided under IRS electronic media rules. It may be possible (depending on the nature of an employer’s workforce) to provide notices electronically without advance affirmative consent of affected participants and beneficiaries. Any plan sponsor who is interested in such approach should discuss it with its own legal counsel with particular focus on unclear requirements of the IRS rule. May be distributed with other materials being furnished to participants and beneficiaries, but as a separate stand-alone notice. A paper version may not be posted on a bulletin board or left in a central work location. May not be included in an SPD or an SMM. |
