[Print]

HOW DO EMPLOYEES GET INFORMATION ABOUT THE PLAN? HOW ARE EMPLOYERS REQUIRED TO REPORT PLAN ACTIVITIES?

ERISA requires plan administrators to furnish plan information to participants and beneficiaries and to submit reports to government agencies.

The following documents must be furnished to participants and beneficiaries.

The summary plan description (SPD) — the basic descriptive document — is a plain language explanation of the plan and must be comprehensive enough to apprise participants of their rights and responsibilities under the plan. It also informs participants about the plan features and what to expect of the plan. Among other things, the SPD must include information about:

• When and how employees become eligible to participate
• The source of contributions and contribution levels
• The vesting period, i.e., the length of time an employee must belong to a plan to receive benefits from it
• How to file a claim for those benefits
• A participant’s basic rights and responsibilities under ERISA

This document is given to employees after they join the plan and to beneficiaries after they first receive benefits. SPDs must also be redistributed periodically and provided on request.

The summary of material modification (8MM) apprises participants and beneficiaries of changes to the plan or to the information required to be in the SPD. The SMM or an updated SPD for a retirement plan must be furnished automatically to participants within 210 days after the end of the plan year in which the change was adopted.

An individual benefit statement provides participants with information about their account balances and vested benefits. For plans sponsored by a single employer, the statement must be provided when a participant submits a written request, but no more than once in a 12-month period, and automatically to certain participants who have terminated service with the employer.

A summary annual report (SAR) outlines in narrative form the financial information in the plan’s Annual Report, the Form 5500 (see below), and is furnished annually to participants.

The blackout period notice, a recent addition to the notice requirements for profit-sharing or 401(k) plans, requires at least 30 days’ (but not more than 60 days’) advance notice before a plan is closed to participant transactions. During blackout periods, participants (and beneficiaries) cannot direct investments, take loans, or request distributions. Typically, blackout periods occur when plans change record keepers or investment options, or when plans add participants due to a corporate merger or acquisition.

REPORTING TO THE GOVERNMENT

Plan administrators generally are required to file a Form 5500 Annual Return/Report with the Federal Government. The Form 5500 reports information about the plan and its operation to the U.S. Department of Labor, the Internal Revenue Service (IRS), the Pension Benefit Guaranty Corporation (PBGC), participants, and the public. Depending on the number and type of participants covered, the filing requirements vary. The form is filed and processed under the ERISA Filing Acceptance System (EFAST). For more information on the forms, their instructions, and the filing requirements, see "www.efast.dol.gov.

There are penalties for failing to file required reports and for failing to provide required information to participants.

CAN A FIDUCIARY TERMINATE ITS FIDUCIARY DUTIES?

Yes, but there is one final fiduciary responsibility. Fiduciaries who no longer want to serve in that role cannot simply walk away from their responsibilities, even if the plan has other fiduciaries. They need to follow plan procedures and make sure that another fiduciary is carrying out the responsibilities left behind. It is critical that a plan has fiduciaries in place so that it can continue operations and participants have a way to interact with the plan.

WHAT HELP IS AVAILABLE FOR EMPLOYERS WHO MAKE MISTAKES IN OPERATING A PLAN?

The Department of Labor’s Voluntary Fiduciary Correction Program (VFCP) encourages employers to comply with ERISA by voluntarily self-correcting certain violations. The program covers 15 transactions, including failure to timely remit participant contributions and some prohibited transactions with parties-in-interest. The program includes a description of how to apply, as well as acceptable methods for correcting violations. In addition, the Department gives applicants immediate relief from payment of excise taxes under a class exemption.

In addition, the Department’s Delinquent Filer Voluntary Compliance Program (DFVCP) assists late or non-filers of the Form 5500 in coming up to date with corrected filings.

For an overview of both programs, consult www.dol.gov/ebsa.

TIPS FOR EMPLOYERS WITH RETIREMENT PLANS

Understanding fiduciary responsibilities is important for the security of a retirement plan and corn pliance with the law. The following tips may be a helpful starting point:

• Have you identified your plan fiduciaries, and are they clear about the extent of their fiduciary responsibilities?
• If participants make their own investment decisions, have you provided sufficient information for them to exercise control in making those decisions?
• Are you aware of the schedule to deposit participants’ contributions in the plan, and have you made sure it complies with the law?
• If you are hiring third-party service providers, have you looked at a number of providers, given each potential provider the same information, and considered whether the fees are reasonable for the services provided?
• Have you documented the hiring process?
• Are you prepared to monitor your plan’s service providers?
• Have you identified parties-in-interest to the plan and taken steps to monitor transactions with them?
• Are you aware of the major exemptions under ERISA that permit transactions with parties-in-interest, especially those key for plan operations (such as hiring service providers and making plan loans to participants)?
• Have you reviewed your plan document in light of current plan operations and made necessary updates? After amending the plan, have you provided participants with an updated SPD or 5MM?
• Do those individuals handling plan funds or other plan property have a fidelity bond?