Am I required to send notices?

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The answer to this question is, “100% yes.” The Department of Labor (DOL) requires all plan sponsors to send notices to all participants for a plethora of different reasons.  

Before we get into the reasons, however, let’s define what “participant” means in this context. 

In most cases, a participant is anyone with an active balance. In some cases, however, the word can refer to someone with an active balance or anyone who is eligible to participate in the plan. For more details on who needs to receive a notice, check with the ERISA counsel or another expert in the 401(k) industry. 

Now, let’s talk about why you have to send notices to these participants.

Required notices either provide detailed information regarding the plan’s current status or identify upcoming changes to it that will affect participants in the near future. Notices include (but are not limited to):

·      Details regarding the plan’s financial status 

·      Changes or additions to the plan’s investment options

·      The plan sponsor’s decisions regarding eligibility, vesting, or plan operational procedures

·      A reminder of the plan’s different aspects and benefits, as with the summary plan description 

You’re required to send many notices annually. However, if plan changes are made sooner, that may require you to send out an extra notice identifying the changes and providing regulatory notice prior to the date they take effect. Whether it bears good or bad tidings, the change notice must still be distributed. 

In a nutshell, if you’re actively operating a company retirement plan, you’re required to send notices. The responsibility to ensure notices go out in a timely manner and reach the required participants falls on the plan sponsor. To guarantee that you fulfill this responsibility, the DOL has issued a best practice template that outlines how a plan should both send notices and ensure that these notices are received, reviewed, and in some cases acknowledged. The DOL has prioritized this practice in many of their plan investigations by requesting proof that the notices were sent and that reasonable effort was made to verify their receipt. 

If you have questions related to notice distribution, or if you simply don’t like to (or have time to) distribute, track, and verify your required retirement plan notifications, contact us at Plan Notice. Let’s discuss how we can take on that responsibility for you and guarantee compliance with the DOL’s best practice policies. 

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