Retirement plan participants receive multiple communications from their plans. Some disclosures are sent automatically, such as each year, every quarter or when joining a plan. Other disclosures are sent when “triggering” events occur, such as termination of employment or divorce. Certain plan documents and reports are available upon request. Beneficiaries, such as spouses, can generally request a copy of a document that is not automatically sent to them.
All company and union plans are required to have these written rules, and to give all participants an SPD when they join the plan. An SPD explains the features of the plan and how and when you can earn retirement benefits. Employers can change the rules of a plan, but your rights to benefits will depend on the rules in effect while you are working and when you leave employment. You will receive an updated SPD at least every ten years, or within five years if changes have been made to the plan. You also may make a written request for a copy of the latest SPD. Additionally, the Pension Benefit Guaranty Corporation (PBGC) maintains an archive of certain old SPDs. You can request an old SPD here.
SPDs contain information crucial to establishing your right to retirement benefits and should be kept for future reference.
SMMs must be sent within 210 days after the end of the plan year in which the change was adopted.
Benefit statements must also tell you if Social Security or other benefits will be subtracted from your final benefit amount and/or how much your benefit amount will be reduced for early retirement.
The information in the benefit statement and the timing of the statement depend upon the type of plan you are in:
– Benefit statements from defined benefit pension plans must be sent every three years to participants employed by the employer. Alternatively, the plan administrator may send a notice each year that a statement will be provided if requested. Participants and beneficiaries may request one benefit statement per year.
– Benefit statements from 401(k) plans where participants choose among investment alternatives must be sent to participants quarterly. The statement will include the balance in the account, the value of each investment (including employer securities), an explanation of any restrictions on the right to direct investments, any individual fees charged to the account, and a statement of the importance of diversifying investments. Beneficiaries, such as spouses, may request a benefit statement once a year.
– Benefit statements from traditional profit-sharing plans and 401(k) plans that do not permit participants to choose among investment alternatives must be sent annually to participants. The benefit statement will include the value of each investment in the account, including any employer securities. Beneficiaries may request a benefit statement once a year.
This statement shows that the participant is entitled to payment of benefits at a later date and the amount of those benefits. This notice can be especially important to separated participants in proving that they had not received their benefits when they left employment, and therefore, will still be entitled to payment of those benefits later, often at retirement age. Participants receiving this notice should keep it for later use.
The notice gives basic information about the funded status of the plan, assets and liabilities of the plan, the funding percentage of the plan and information about the benefits guaranteed by the Pension Benefit Guaranty Corporation. Read more about this notice here.
The SAR is a summary of the complete annual financial report (Form 5500) that is filed with the Labor Department each year.
These disclosures provide the fee and investment information participants need to make informed decisions about their investments. Read more here.
A triggering event can be an important point of decision for participants and beneficiaries.
Some disclosures relating to triggering events include notices about the status of the plan and others are directly related to participant decisions. The timing of triggering event notices can be particularly important when the event offers an opportunity for action by the participant.
Some important triggering event notices include:
Triggering event notices that may require action include:
Notices Triggered by Termination of Employment are particularly important for participants to understand their rights to receive benefits, what form the benefits will be, and the rights of spouses and other beneficiaries.
The notices are provided in a reasonable period of time in advance of termination of employment. They include:
For general information on forms of benefit payments at termination of employment see our Roadmap to Retirement, “Form and Amount of Benefits.”
The Plan Document may be requested in writing by participants and beneficiaries. Other legal documents that can be requested include collective bargaining agreements and trust documents. Plan documents must also be available for viewing at the office of the plan administrator.
FORM 5500s contain detailed financial information about the plan and may be requested from the plan administrator in writing. The latest Form 5500s can also be searched from the Labor Department website or requested by calling the Labor Department at 1-866-444-3272. Also, you can search for Form 5500s using the website, FreeERISA.
When documents are requested plan administrators must provide copies within 30 days. Plan administrators can charge a reasonable copying fee for some documents. If a plan administrator fails to respond to a written request for a document, participants and beneficiaries can contact the Labor Department at 1-866-444-3272.