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Retirement Topics - Notices

The law requires plan administrators to give employees in writing the most important facts they need to know about their pension plan. The plan administrator must provide some of these facts to employees regularly and automatically. Others are available upon written request, free of charge or for copying fees. Plan administrators can give notices to participants electronically as long as they meet certain conditions.

Notice When Employee Starts in Plan

There are several documents that an employer should provide, depending on the type of retirement plan and when the employee meets the eligibility requirements.

a. Summary Plan Description

b. Enrollment Package

c. Beneficiary Designation Form

d. Salary Deferral Election Form

Notice When Plan Applies to IRS for a Determination Letter for Qualification or Plan Termination

This notice must go to all interested parties, which includes plan participants, between 10 – 24 days of when a plan applies to the IRS for a determination letter regarding its qualified status, including when the employer terminates the plan.

Notice for Automatic Enrollment

Prior to automatically enrolling an employee in either an EACA or QACA plan, the employer must give the employee a notice at least 30 days, but no more than 90 days, before the employer automatically enrolls the employee. If the employee is newly hired and the plan has immediate eligibility, then the employer may give the employee this notice on the date he or she is hired.

Notice of Suspension of Benefits

This notice is given to employees when they work after the plan’s normal retirement date and their benefit payments are suspended. It should describe why and when an employee’s benefit payments are being suspended.

Notice that a Lump Sum is Eligible for Rollover

A participant should receive this notice when he or she receives a distribution from the plan that is eligible to be rolled over. It should describe the effects of rolling an eligible rollover distribution to an IRA or another plan and the effects of not rolling it over. The employer must give the notice between 30-180 days before an employee receives a distribution. However, the employee may waive the 30-day period. If a participant dies, then his or her spouse or beneficiary, if unmarried, must receive this notice. Beginning in 2009, plans are required to offer a non-spouse beneficiary the opportunity to roll over the deceased participant’s account balance and must notify the non-spouse beneficiary that the deceased participant’s account balance is eligible for rollover.

Notice 2009-68 simplifies the presentation of an employee’s options when receiving an eligible rollover distribution. It contains two sample explanations that satisfy the  requirements of the notice employers must provide to employees leaving with retirement assets. These sample explanations also reflect law changes -- such as information on a distribution from a designated Roth account under an employer plan -- and to explain rules that apply in special situations -- such as when a distribution is made to a surviving spouse or other beneficiary. This notice “modifies and supersedes” Notice 2002-3. However, the models in Notice 2002-3 (appropriately modified to reflect statutory changes) will continue to be safe harbor explanations with respect to notices provided through the end of 2009. (So, sponsors can immediately move to the models in the new notice, or can continue to use the old models as appropriately modified on a transition basis through the end of 2009.)

Notice of an Individual’s Benefits

The individual benefits statement (IBS) shows the benefits earned by a participant and his or her vested amounts. It must be given to a participant upon his or her written request, but no more than once in a 12-month period, and automatically to certain participants who have terminated service with the employer. Plans that provide for participant-directed accounts must furnish individual benefits statements on a quarterly basis. Plans that do not provide for participant direction must furnish statements annually.

Notice of Qualified Joint & Survivor Annuity

A QJSA notice generally must be given to plan participants in certain retirement plans that contain a QJSA feature. It is given between 30 and 180 days prior to the date benefits are paid. The QJSA notice explains:

  • the QJSA's terms and conditions,
  • the effect of waiving the QJSA and choosing a different benefit payment form,
  • a participant's spouse’s or non-spouse beneficiary’s right to not consent to waiving the QJSA, and
  • the participant’s right to revoke a waiver.

Notice of Qualified Optional Survivor Annuity

A QOSA notice must be given to plan participants in certain retirement plans that contain a QOSA feature. It is given between 30 and 180 days prior to the date benefits are paid. The QOSA notice explains:

  • the QOSA's terms and conditions,
  • the effect of waiving the QOSA and choosing a different benefit payment form,
  • a participant's spouse’s right to not consent to waiving the QOSA, and
  • the participant’s right to revoke a waiver.

Notice of Qualified Preretirement Survivor Annuity

A QPSA notice must be given to a participant during the time beginning when he or she is age 32 and ending with the close of the plan year before the participant is age 35 or within one year from when an employee becomes a plan participant if he or she is hired after age 35. It is given in certain retirement plans that contain a QPSA feature. The QPSA notice explains:

  • the terms and conditions of the QPSA,
  • what will happen if the participant and spouse waive the QPSA,
  • the spouse's right to not sign the waiver, and
  • the participant's right to revoke such a waiver.

Notice of a Defined Benefit Plan’s Annual Funding

Defined benefit plans must give each participant an annual funding notice no later than 120 days after each plan year. It must include, among other things, the plan’s funding percentage, a statement of the value of the plan’s assets and liabilities and a description of how the plan’s assets are invested as of specific dates, and a description of the benefits under the plan that are eligible to be guaranteed by the PBGC. Small plans (100 or fewer participants) must give the notice upon the earlier of: the date that Form 5500 is filed or the due date of Form 5500 (including extensions).

Notice of Blackout Period

In an individual account plan, the plan may impose a blackout period where there is a temporary suspension, limitation or restriction on the ability of participants to direct or diversify assets, to obtain loans, or to take plan distributions. When a blackout period is imposed, participants should receive a communication regarding the blackout period.

Notice Given to Participants When They Leave a Company

This notice describing participants’ benefits and the procedures to obtain them must be given to participants within 90 – 180 days of when they have retired or quit working. The information given to a participant will vary depending on the type of retirement plan, the reason the participant has stopped working, and the participant’s age but must explain a participant’s right to defer receiving his or her account balance and the consequences of taking money out of a retirement plan now rather than later.

Notice for SIMPLE IRA plans

If an employer adopts a SIMPLE IRA plan, it must notify each employee of the following information before the beginning of the election period.

  1. The employee's opportunity to make or change a salary reduction choice under a SIMPLE IRA plan.
  2. The employee's opportunity to make or change a salary reduction choice under a SIMPLE IRA plan.
  3. The employer’s choice to make either matching contributions or nonelective contributions.
  4. A summary description provided by the financial institution.
  5. Written notice that his or her balance can be transferred without cost or penalty if the employer uses a designated financial institution.

Election period. The election period is generally the 60-day period immediately before January 1 of a calendar year (November 2 to December 31 of the preceding calendar year). However, the dates of this period are modified if the employer sets up a SIMPLE IRA plan in mid-year (for example, on July 1) or if the 60-day period falls before the first day an employee becomes eligible to participate in the SIMPLE IRA plan.

Notice for Safe Harbor 401(k) Plans

The Notice for Safe Harbor 401(k) plans must describe, among other things, whether the employer will make either matching or nonelective contributions, the amount of matching contribution that will be made and the amount of compensation that can be deferred. It must be given to each eligible employee within a reasonable period (at least 30 days and not more than 90 days) before each plan year and other times where an employee doesn’t receive the annual notice because he or she becomes eligible after it has been distributed.

Notice that Employer has Not Made a Required Defined Benefit Contribution

This notice must be given to plan participants within 60 days of when quarterly employer contributions are due to a defined benefit plan stating that the employer did not make a required funding contribution.

Notice that the Employer is Terminating the Plan

The Notice of Intent to Terminate must be given to the following “affected parties” when a defined benefit plan has a standard termination:

  • plan participant;
  • beneficiary of a deceased participant;
  • alternate payee under an applicable QDRO;
  • employee organization that currently represents any group of participants; and
  • employee organization that last represented participants not currently represented within the 5-year period before the Notice of Intent to Terminate is issued.

Notice that a Terminated Plan has been Abandoned

This notice must be given by a qualified termination administrator to a plan participant of a terminated plan that has been abandoned apprising the individual of his or her account balance and requesting that such individual elect a form of distribution.

Notice that the Plan has Reduced Benefits

This notice must be given by the plan administrator to plan participants when their future benefit accruals will be significantly reduced by a plan amendment or some other employer action such as a merger. It should be written in a manner understood by the average plan participant in explaining how benefits will be reduced or eliminated.

It should be given at least:

  • 45 days prior to the effective date of benefit reduction
  • 30 days for an early retirement subsidy in a merger or acquisition, and
  • 15 days for other mergers or if a small pension plan is involved.

Notice of Waiver of Minimum Funding Requirement

This notice must be given to plan participants when the employer requests a waiver of the minimum funding requirement from the IRS. It should be given within 14 days of the date that the application for a funding waiver is filed with the IRS.

Critical and Endangered Status Notices for Multiermployer Plans

This notice must be given to participants in multiemployer defined benefit pension plans that are in, or will be in, endangered or critical status for a plan year to inform them of this status. Beneficiaries, the bargaining parties, the Pension Benefit Guaranty Corporation and the Department of Labor must also be notified. It must be given no later than 30 days after the plan actuary certifies that it is in either critical or endangered status.

Section 436 Notice

This notice must be given by a plan administrator of a single-employer defined benefit plan to participants within 30 days after a plan has become subject to a §436.

Electronic Notices

Electronic Notices can be given to participants as long as they meet certain conditions:

  • The electronic system must be reasonably designed so that the notice is conveyed in a manner that is no less understandable than if given in a paper document.

  • It must meet the consumer consent requirements or meet the exemptions from them (see #3):
    • Notice isn’t provided orally.
    • Recipient must consent either electronically or written to have the notice delivered electronically
    • Prior to consenting to receive the notice electronically, the recipient must be given disclosure statements.
    • If, after consenting to receive notices electronically, the plan administrator changes the hardware or software needed to access the notice and such change creates the risk of the recipient not being able to access it, then the plan administrator must give the participant certain notices.

  • The plan administrator meets the exemption from consumer consent requirements:
    • The electronic media used to send the notice must be a medium that the recipient can access.
    • When the electronic notice is sent, it must advise the recipient that he or she may request in writing at no charge.

Additional Resources:

EP Examination Process Guide - Section 9 - Participant Rights
Flyer: Employee Notices
Regulations Section 1.401(a)-21- Rules relating to the use of an electronic medium to provide applicable notices and to make participant elections.

Page Last Reviewed or Updated: 26-Feb-2014