- ERISA Fiduciary Advisor
How do employees get information about the plan? What are the reporting requirements for the plan?
ERISA requires plan administrators to furnish plan information to participants and beneficiaries, and to submit reports to government agencies. There are penalties for failing to file required reports and for failing to provide required information to participants.
Informing participants and beneficiaries
The following documents must be furnished to participants and beneficiaries:
- The Summary Plan Description (SPD) is the basic descriptive document, and must be written in
plain language. This document is given to employees after they join the plan and
to beneficiaries after they first receive benefits. SPDs must also be
redistributed periodically and provided on request.
Among other things, the SPD must include information about:
- Participants' rights and responsibilities under the plan;
- Plan features and what to expect of the plan;
- When and how employees become eligible to participate;
- The source of contributions and contribution levels;
- The vesting period, i.e., the length of time an employee must belong to a plan to receive benefits from it;
- How to file a claim for those benefits; and
- Participants' basic rights and responsibilities under ERISA.
- The Summary of Material Modification (SMM) describes changes to the plan or the SPD. The SMM or an updated SPD must be furnished automatically to participants within 210 days after the end of the plan year in which the change was adopted.
- Periodic Benefit Statements with information to participants and beneficiaries about their account balances and vested benefits must be provided:
- quarterly for individual account plans that permit participants to direct their investments,
- annually for individual account plans that do not permit participants to direct their investments, and
- every three years for defined benefit plans.
- Individual account plans must also include information on the importance of diversifying investments, including information on the Department of Labor's website about investment and diversification. See Field Assistance Bulletin.
- A Summary Annual Report (SAR) outlines in narrative form the financial information in the plan's Annual Report, the Form 5500 (see below), and is furnished annually to participants.
- The Blackout Period Notice informs profit-sharing or 401(k) plan participants at least 30 days but not more than 60 days before a plan is closed to participant transactions. During blackout periods, participants and beneficiaries cannot direct investments, take loans, or request distributions. Typically, blackout periods occur when plans change record keepers or investment options, or when plans add participants due to a corporate merger or acquisition.
Reporting to the Government
Plan administrators for defined contribution plans and defined benefit plans are generally required to file a Form 5500 Annual Return/Report with the Federal Government. The Form 5500 reports information about the plan and its operation to the U.S. Department of Labor, the Internal Revenue Service (IRS), the Pension Benefit Guaranty Corporation (PBGC), participants, and the public. Depending on the number and type of participants covered, the filing requirements vary. The form is filed and processed under the ERISA Filing Acceptance System (EFAST).
EBSA's EFAST website has information on the forms, their instructions, and the filing requirements, including the publication Reporting and Disclosure Guide for Employee Benefit Plans.
Federal law generally requires employee benefit plans with 100 or more participants to have an audit as part of their obligation to file the Form 5500. For information on hiring and working with an auditor see Selecting An Auditor For Your Employee Benefit Plan
The Department of Labor has a Delinquent Filer Voluntary Compliance Program to assist late or non-filers of the Form 5500.