Extension of Date for Certain Individual Account Plans to Provide Individual Benefit Statements

On October 12, 2007, the Department of Labor (DOL) issued Field Assistance Bulletin (FAB) 2007-03, which extended the date for administrators of certain individual account defined contribution (DC) plans to provide benefit statements to participants and beneficiaries.¹

BACKGROUND

Beginning in 2007, the Pension Protection Act of 2006 (PPA’06) requires DC plans to provide periodic benefit statements to their participants and beneficiaries. Quarterly statements are required for plans that permit participants to direct the investment of their accounts. Individual account plans that do not provide for participant-directed investments are required to give the statements annually.

Last year, the DOL indicated that, pending further guidance, DC plans would be considered in good faith compliance with this PPA’06 requirement if benefit statements were provided within 45 days after the end of the relevant period.²

REASON FOR THE EXTENSION

Since releasing that guidance, the DOL has become aware that many DC plans that do not permit participant direction of investments cannot obtain the information necessary to prepare benefit statements within 45 days after the end of the plan year. Administrators of multiemployer plans, for example, may need additional time to reconcile contributions and allocate earnings and expenses to individual accounts.

THE EXTENSION

Because much of the information needed for the benefit statements is compiled in preparation of a plan’s Form 5500 Annual Return/Report, FAB 2007-03 revised the dates for furnishing benefit statements to participants and beneficiaries of individual account plans that do not permit directed investments. These plans will now be considered in good faith compliance if the benefit statements are provided on or before the date on which the Form 5500 Annual Return/Report is filed by the plan but not later than the date, including extensions, on which the Annual Report/Return is required to be filed by the plan for the plan year to which the statement relates.

Plan sponsors should note that because this is interim guidance, the rules could change after the DOL publishes formal regulations. Also, this guidance is a Field Assistance Bulletin, which, officially, only states the DOL’s enforcement policy.

The Segal Company can be retained to assist plan administrators in the development and design of benefit statements.

1	To see Field Assistance Bulletin 2007-03, click here. (To return to the Compliance Alert text, click here.)
2	To see Field Assistance Bulletin 2006-03, click here. For information about that guidance, see Segal’s February 2007 Bulletin, “Retirement Benefit Statements: Welcome Guidance and Relief” (To return to the Compliance Alert text, click here.)

Compliance Alert, The Segal Company’s periodic electronic newsletter summarizing important developments affecting benefit plan compliance, is for informational purposes only. It is not intended to provide authoritative guidance. On all issues involving the interpretation or application of laws and regulations, plan sponsors should rely on their attorneys for legal advice.

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