It’s that time of year again when calendar year 401(k) plans must send annual retirement plan notices. As you work with your service providers to make sure all notices are sent, now may be a good time to reacquaint yourself with the more common notices and related 401(k) plan documents that must be provided to employees. Mistakes can happen especially with the Who and the When, so here is a chart of the common notices with timing and recipients.
Annual Notices
Note: The 401(k) safe harbor, QDIA may be combined into a single document. For calendar year plans annual notices are due no later than December 2, 2023.
Notice upon specified events
Other Documents
Also note that the plan sponsor must send certain documents to participants and beneficiaries generally within 30 days of their request, such as the plan document.
“Oh, no!” What happens if you miss a notice or send it to the wrong individuals? A mistake with the timing or recipients of your notices is generally considered a plan operational failure which may result in penalties for the plan sponsor. For example, the Department of Labor (DOL) may assess a penalty of up to $110 per day per incident for failing to provide an SAR, SPD, or SMM upon request. Far more concerning, the DOL could impose a penalty up to $2,046 per day per incident for failing to send an automatic enrollment notice. It’s unclear whether or not they would impose such a large penalty, but it’s best not to find out.
Some failures may require corrections under the Internal Revenue Service’s Employee Plans Correction Resolution System (EPCRS). For example, failure to provide the safe harbor notice could result in an employee not knowing they can defer into the plan. If they were deemed to be improperly excluded from participating, the employer may need to make corrective contributions to the plan pursuant to EPCRS.
Finally, a failure can have fiduciary concerns. Failure to send the QDIA notice, for example, will cause the plan to lose its fiduciary protection under ERISA’s QDIA safe harbor.
For a detailed list of disclosure requirements, see the DOL’s Reporting and Disclosure Guide for Employee Benefits Plans.
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