Do I need to prove I have sent my 401k notices?
Short answer: yes.
Here comes the long answer.
The Department of Labor (DOL) has increased its investigation intensity regarding participant communication and missing participants. After outlining their communication expectations in a memo in early 2021, the DOL began adding specific requirements to many of their plan investigation requests, including:
- Proof of noticing
- Evidence of notice receipt
- Verification of participant census information
- Execution of recommended escalation steps when required
As a plan sponsor or plan administrator, you need a system to show that you sent your notices and followed the recommended DOL procedures to the best of your ability.
So, how can you prove you sent your notices?
While the DOL hasn’t issued any detailed guidance on how to prove your mail was sent, the following indicators present a responsible trail:
- First, you can show proof of postage and a detailed manifest from the US Postal Service showing that physical mail was sent.
- Second, you can provide an email list that shows evidence of electronic noticing. Note - If you send notices by electronic mail, make sure you follow the electronic delivery rules the DOL has stipulated.
- Third, you can require participants to acknowledge receipt of either electronic or paper notifications and provide those responses to the DOL.
These documented systems show the DOL your efforts to distribute the required notices. Once you decide how to provide proof of delivery, we recommend you keep it consistent. The plan sponsor (you), the plan administrator, and the plan committee should develop written policies detailing how you’re going to send notices, how participants should acknowledge receipt said notices, how you’ll handle return-to-sender or undeliverable mail, and how (and how often) you’ll verify participant census data. Always maintain a proof-of-work audit trail showing these policies’ execution as part of the plan compliance file. That way, if the DOL, the IRS, or a litigation attorney ever requests proof of proper noticing, you’ll be able to provide it.
Contact us at Plan Notice to help develop a participant notification policy or outsource this responsibility. Our services give you a solution that meets all DOL requirements and provides you or any auditor with a documented trail of every required step to prove you practiced the highest diligence in sending participant notices.
