Compliance with Participant Communication

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Today we will be discussing Ensuring Compliance in Participant Communication and the Guidelines from the Department of Labor.

The Department of Labor established guidelines in early 2021 for participant communication and handling of missing participants. According to these guidelines, the plan sponsor is accountable for ensuring that all participants receive required notices, regardless of the size of their assets. Plan sponsors must communicate appropriately, safeguard participant assets, and refrain from discriminating based on the participant's balance.

It's vital for plan sponsors to recognize that the perceived size of balances depends on the individual participant's perspective. For instance, a retirement account with a balance of $50,000 could be deemed substantial or insignificant. Participants don't have the obligation to inform plan sponsors about the significance of these assets in their overall retirement strategy. Following noticing requirements irrespective of participants' balance ensures compliance and protects the plan.

Liability-wise, smaller balances might seem less financially risky for the plan. However, in our litigious society, any participant, even those with modest balances, can initiate a class lawsuit against the plan. Treating every account equally can mitigate such legal liabilities.

For more information, contact us today.