Course 8 Plan Disclosures Flashcards
(27 cards)
What is included in an SPD
- Identifying Info about the plan, the employer, and the fiduciaries
- The requirements for eligibility
- How benefits accrue
- Vesting requirements
- When distributions are available
- The forms of payment available
- How to make a claim for benefits
- Description of the circumstances which may result in disqualification, ineligibility or denial of benefits
- An explanation of a participants enforcement rights under ERISA
- A description that explains QDRO procedures or a statements that participants and beneficiaries may receive them without charge from the plan admin
- Details regarding the effect of a plan termination on a participants rights under the plan
The SPD is required to be given to…
each participant covered under the plan and each beneficiary who may be entitled to benefits under the plan
How is the SPD written…
in a manner that is reasonably expected to be understood by the average plan participant.
- avoid technical jargon
- avoid complex sentences
- Use examples and illustrations to explain the terms of the plan, clear cross-references and a table of contents.
When is an SPD required to be given in another language
when 25% (or the lesser of 10% or 550 for large plans) of the participants are literate in only that language
When must the SPD be provided?
no later than 120 days after the later of the effective date or the adoption date of the plan for new plans, no later than 90 days after a new participant enters
When must new SPDs be delivered if there are amendments made to the plan?
every 5 years
When must new SPDs be delivered if there are NO new amendments made to the plan?
every 10 years
Who prepares the SPD?
the same service who prepares the plan document
Summary of material modification (SMM)
It is due within 210 days after the end of the plan year whenever any of the plan’s features have been significantly changed.
Contents of SMM
- Eligibility or vesting provisions
- Allocation or benefit formula
- Conditions for receiving an allocation
- Benefit claims procedures
- Distribution Options
- New trustees, plan admin, employer sponsor, or other fiduciary
- Addition of new contribution source
The SMM does not have to be provided to…
retired participants, beneficiaries receiving benefits, or vested separated participants if the modification doesn’t affect them
Documents that must be made available to participants or beneficiaries upon their written request and when they must be delivered
Plan doc
SPD
5500
Trust agreement
Other instruments under which the plan is established or operated
While copies must be furnished no later than 30 days following a written request, a reasonable charge for printing the copies may be assessed.
ERISA 408(b)(2) disclosures
summary of each provider’s fees and services which are required to be provided to plan sponsors by some service providers (covered service providers).
What must the 408b2 disclosures describe?
The services provided and the comp they expect to receive
covered service providers
recordkeepers, fiduciary service providers, and providers paid by the plan via indirect comp such as broker dealer, investment providers, TPAs, banking, and insurance providers
Who’s responsibility is it to supply the info to the plan fiduciary?
covered service providers
Who reviews the info received from the covered service providers?
the plan fiduciaries to ensure that fees paid are reasonable
404(a)(5) notice
ERISA that requires participant fee and investment disclosure.
What plans do the 404 fee disclosures not apply?
required annually,
- An explanation of the circumstances under which investment instructions may be given
- Limitation on transaction such as restrictions on transfers to and from a specific investment
- An explanation of plan provisions relating to stock voting or tender rights
- A description of each designated investment alternative
- Any investment identified by a plan fiduciary, such as a menu of funds, into which participant can direct their investment.s
- Identify any designated investment managers
- A description of any self-directed brokerage account where an employee can opt out of investments not designated by the plan
General info on admin expenses must be provided at least annually
An explanation of fees that may be charged against a participant’s account
A description of how the expenses is allocated to participants (pro rata or per capita)
Info about individual expenses
Fees that may be charged directly to the individual, such as fees for loans or distribution processing, must be provided on an annual basis
Fees that were charged to a participant’s account must be provided on a quarterly basis
An investment chart must be proved at least annually
A listing of the investments and their performance history, including benchmarking against similar investments
All fees associated with the investments
The DOL has provided a model investment chart that plants may use.
When is the 404 fee disclosure provided?
The disclosure is provided when you become eligible for the plan, some info will be provided quarterly as described above, other info will be provided annually as described above, when there is a change in any of the info included in the notice.
Blackout period
Three or more consecutive business days in which participants are unable to change investment elections, take distributions or obtain loans.
