Did You Notice: DC Plan Communications

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Did You Notice: DC Plan Communications

  1. 1. Did You Notice: DC Plan CommunicationsASPPA Annual Conference – Workshop #2 – November 1, 2009 Presented by Robert Kaplan, ING Retirement Services Adam C. Pozek, DWC ERISA Consultants, LLC
  2. 2. Overview
  3. 3. Why All These Notices? Importance of Defined Contribution plans to retirement Effective availability of benefits Complexity of participant decisions Timeliness of information Written in a manner calculated to be understood by the average participant.
  4. 4. Common Notifications Summary Plan Description (SPD) Summary of Material Modification (SMM) Summary Annual Report (SAR) Participant Benefit Statement
  5. 5. New Notices Auto enrollment notice (QACA/EACA) QDIA notice Stock diversification notice Auto rollover notice
  6. 6. Forms Enrollment/deferral election Investment election Beneficiary designation
  7. 7. GeneralDisclosures
  8. 8. Summary Plan Description A “Plain English” description of plan provisions Must include information on:  Eligibility  Vesting  Contributions  Distributions  Plan contact information
  9. 9. Summary Plan Description Must be provided:  Within 90 days of initial eligibility  Within 120 days of plan becoming subject to ERISA Must be updated:  Every 5 years if plan is amended  Every 10 years if plan is not amended EGTRRA Restatements – budget time for SPD Updates
  10. 10. Summary Plan Description Penalties  Up to $1,100 per day to DOL  Up to $110 per day to participants
  11. 11. Summary of Material Modification Any time an amendment changes information from SPD Due by 210th day of the year following the effective date of amendment Advance notice Same penalties as SPD
  12. 12. Claims Procedure Usually included in SPD Appeals process and timeframes Same due date as SPD Same penalties as SPD
  13. 13. QDRO Procedure Usually included in SPD Procedure for review and qualification of Domestic Relations Orders
  14. 14. Summary Annual Report Financial information from Schedule I/H to Form 5500 Notification of right to additional information Contact information for DOL Due 2 months after Form 5500 filing deadline
  15. 15. Participant Benefit Statements Current Requirements  Quarterly for participant-directed plans (45 days after  Annually for trustee-directed plans (5500 filing) Based on most recently available information Penalty of up to $100 per day to participant
  16. 16. Participant Benefit Statements Account information Vesting information Statement regarding importance of diversification DOL website for more information on proper investing Statement regarding integration with SS Note: Still waiting for DoL sample statement which as due to us by August 17, 2007
  17. 17. Participant Benefit Statements Brokerage accounts Employer securities On-demand statements Hard-to-value assets Fiscal year plans
  18. 18. InvestmentDisclosures
  19. 19. Participant Education Educational materials Risk tolerance survey 404(c) disclosures
  20. 20. Qualified Default Investment Alternative Describes default action if no investment election is on file Due 30 days before default action is taken (exemption for immediate eligibility plans) and prior to each plan year Provides relief from liability for plan fiduciaries
  21. 21. Qualified Default Investment Alternative Right to move money without financial penalty Balanced fund Lifestyle/target maturity date fund Professionally managed account No current provision for money market or stable value fund
  22. 22. Participant Investment Advice Delayed until 11/18; proposed legislation in the House Acknowledgement of fiduciary status All fees and compensation Historical performance of all options Material relationships between advisor and investments options Manner in which participant info will be used Participant’s right to seek other advice
  23. 23. Fund Mapping Notice 30 – 60 days in advance  Comparison of old and new options  Explanation of default action to be taken No affirmative instruction from participant Investment prior to mapping resulted from participant direction
  24. 24. Diversification of Employer Securities Employee contributions  Immediate Employer contributions  Completion of 3 years of service Frequency  Same as other investment transfers  At least quarterly
  25. 25. Diversification of Employer Securities 30 days prior to date of eligibility to diversify Importance of diversification Penalty of $100/day/participant for failure to provide
  26. 26. JoiningThe Plan
  27. 27. Enrollment Deferral election Catch-up election Bonus election Investment election/QDIA Automatic enrollment
  28. 28. Beneficiary Designations Considered to be plan documents Override state domestic relations laws and wills
  29. 29. Distribution Notices
  30. 30. Distribution Notices Application for payment (30 to 180 days prior) Special Tax Notice Election to defer RMD Form 1099-R
  31. 31. Mandatory Distribution/Auto Rollover Notification of rollover in lieu of election Financial institution Investment product to be used Expenses
  32. 32. Participant Loans Participant loan program Loan application Promissory note Amortization schedule Truth-in-lending disclosure  Eliminated as of July 1, 2010
  33. 33. Miscellaneous Disclosures
  34. 34. Blackout Period Participant notice 30 days prior to blackout Identify beginning and ending week Explain rights and investments affected Advise as to the prudence of a diversified portfolio Penalties of $100 per day per participant for failure to give notice Question on 2009 Form 5500
  35. 35. Safe Harbor Notice 30 - 90 days prior to start of the plan year Contribution, distribution and vesting information Supplemental notice for “Flexible” QNEC Disqualification for failure to provide
  36. 36. Robert Kaplan ING Retirement Services 914.629-8882 Robert.Kaplan@us.ing.com Adam C. Pozek DWC ERISA Consultants, LLC 651.204.2600, ext. 107Adam.Pozek@dwcconsultants.com

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