SummaryThe Department of Labor has provided plan administrators with a one-time opportunity to delay annual distribution of investment information to retirement plan participants for up to 6 months in 2013 or 2014. This gives plan administrators the opportunity to eliminate the need for a stand-alone distribution of the comparative chart of investments and reset the time for distributing the chart with other mailings. (An administrator may decide, for example, that it makes more sense to send this information with the annual enrollment information sent in November or December or with the annual statements sent in January.) However, administrators must decide soon whether to use this opportunity for 2013.
BackgroundERISA plans with participant investment direction, including almost all 401(k) and 403(b) plans and many profit sharing plans, are required to provide participants with an annual notice that describes information about the plan and its investment options, including a chart that compares the plan’s investment options. (Please see our prior advisory.)
The initial notice was due by Aug. 30, 2012, for a calendar year plan, and the next annual notice was required to be distributed any time before the one-year anniversary of the date of the first disclosure. Plan administrators had expressed concern with this compliance deadline because the comparative chart of investments could not be combined with other plan disclosures. For example, a plan that had furnished the initial notice on August 25, 2012, would have to distribute the notice for the 2013 plan year by August 25, 2013, and could not wait to include it with other plan communications, such as participant benefit statements, that are typically sent at other times of the year.
New GuidanceOn July 22, 2013, the Department of Labor (DOL) announced that plan administrators may reset the time for distributing investment-related disclosures to plan participants beginning in either 2013 or 2014. As a result, disclosures can now be distributed within 18 months, instead of 12 months, after the initial distribution date. For example, the deadline for the comparative chart of investments that would otherwise have been due on Aug. 25, 2013, is now Feb. 25, 2014.
A plan that has already sent out a chart for 2013 or does not want to delay its 2013 distribution may instead delay the 2014 distribution until 18 months after the date of the 2013 distribution. For example, if a plan distributes the first comparative chart of investments on Aug. 25, 2012, and the second on Aug. 20, 2013, the distribution for 2014 may be delayed as late as Feb. 20, 2015.
This one-time reset of the distribution deadline allows plans to combine the distribution of the comparative chart of investments with other plan disclosures. For example, it could accompany participant education and enrollment materials often given out in December, or with the 2013 annual statement sent out early in 2014. Not only will the administrative costs of an additional distribution be eliminated, but the inclusion of the investment information with other plan communications may also increase its effectiveness.
Also, the DOL indicated that it is considering a permanent revision to the timing requirement to replace the 12-month deadline for the annual distribution of the comparative chart of investments with a 30- or 45-day window. This change, if adopted, would give plan administrators additional flexibility in complying with distribution requirements.