DOL Delays Obligation of 401(k) and 403(b) Plans To Distribute Annual Investment Related Information


The U.S. Department of Labor (DOL) yesterday released Field Assistance Bulletin 2013-2 granting plan sponsors of participant-directed individual account plans (such as 401(k) and 403(b) plans) the ability to delay this year’s disclosure of annual investment related information to plan participants and beneficiaries. Plan sponsors were required to provide the original notice by August 30, 2012. The DOL regulations require that the notice also be distributed “at least annually thereafter.” This means each annual notice would have to be distributed within 12 months of distribution of the prior year’s notice..

Critics of the annual notice requirement have complained that August does not correlate with any other annual participant disclosures for calendar-year retirement plans. Consequently, the DOL is permitting plan sponsors a one-time delay in distributing the annual notice. For 2013, the plan sponsor may wait up to 18 months from the date of distribution of the prior notice to distribute the new annual notice. This delay will allow plan sponsors to put the annual notice on the same schedule as other annual participant disclosures, such as notices for Qualified Default Investment Alternative (QDIA) or safe harbor status.

Recognizing that some plan sponsors have already prepared or mailed notices in anticipation of this August 2013 deadline, the DOL also permits plan sponsors who do not take advantage of this relief during 2013 the same 18-month period for 2014 annual notices.

Most third-party administrators and vendors prepare these annual notices for plan sponsors. Plan sponsors should keep in mind that the notice is an obligation of the plan sponsor and not the vendor. Plan sponsors should carefully review the notice to ensure that it is accurate and meets all legal requirements.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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