Communicating Retirement Plan Benefits

Today we want to discuss Communicating Retirement Plan Benefits to Active and Non-Active Participants.

In retirement plan discussions, we often refer to "active" and "non-active" participants. Active participants are current employees who regularly defer a portion of their paycheck into the retirement plan. Non-active participants are eligible to contribute to the retirement plan but have chosen not to. They may have no balance if they've never been active, or they may have stopped contributing due to various circumstances.

Regardless of their status, all employees receive standard notices that explain the plan's operations, benefits, and related procedures. This includes the Summary Annual Report, the Summary Plan Description, the Qualified Default Investment Account notice, and the Safe Harbor notice if applicable. They should also receive information about any upcoming plan amendments or fund changes.

In addition to these required notices, plan sponsors may send specific communications to non-active employees to remind them of their eligibility and the benefits they're missing. Such outreach serves dual purposes:

Enhancing the employee experience, as using any employer-provided benefit can increase their chances of staying with the company. Ensuring compliance by keeping the employee's contact information current.

Much like former employees, non-active participants might not keep their contact information up-to-date, posing a challenge for plan sponsors in maintaining communication. However, verifying receipt of information is crucial to meet the Department of Labor's compliance requirements.

For more information, don't hesitate to contact us today.