How Can Plan Trustees Know What Plan Documents to Distribute? Plan Trustees struggle with knowing exactly which plan documents they are required to distribute to 401k plan participants. After the conclusion of a Fiduciary Education Program held at Southern Connecticut State University in New Haven, Connecticut, Fred Barstein, Founder and CEO of The Plan Sponsor University (TPSU) addressed that very point with Lenore, one of the TPSU Program attendees. Lenore manages Health, Welfare and Benefits Programs at the mid-sized company where she works.
All benefit managers are charged with the responsibility of disseminating “required” information to retirement plan /401k) plan participants. As Manager of Benefit Programs, there is a concern that something might be missed. Lenore’s concern is not hers alone. During TPSU Fiduciary Education Programs throughout the country, a question that is frequently asked is, “How do I know when I need to distribute each form or document?” This is normally followed up with the question, “What if we miss a date or a deadline?”
Drilling Down on 404c Plan Sponsor Notices
Assuming a 401k Plan sponsor intends to seek safe-harbor relief under Section 404c, what steps should the plan administrators take? Whom does the plan administrator rely upon when Section 404(c) Plan Disclosures are being made? And do plan beneficiaries need to be informed – or only active plan participants?
When should a plan sponsor make 404c notices available? There are requirements as to “when” 404(c) notices are required to be delivered. Some information needs to be furnished to participants or beneficiaries before the time when investment instructions are to be made. Other information needs to be furnished upon request.
There are many other required notices as well: the Qualified Default Investment Alternative Notice and the Participant Plan and Investment Fee Disclosure to name a few. Failing to meet notice deadlines can often open a plan sponsor to having to pay heavy penalties.
How Does a Plan Sponsor Stay Current?
Plan sponsors can obtain information from their service providers, record keepers, third party administrators or retirement plan advisors. However, it is rare that a service provider will assume full responsibility for all notices and procedures.
A good practice would be to obtain notice requirements directly from the Department of Labor. The Department of Labor makes it simple for plan sponsors to learn their responsibilities associated with administering a plan. It is then up to the plan administrator to carry out their duties.
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