Pension Protection Act Blog

Interesting question today - should the Quarterly Benefit Statement include the vesting schedule for the plan. The easiest answer to this question is to avoid it all together and provide the alternate notice because the alternate notice does not require vesting information to be provided this quarter, and hopefully the IRS will issue a model notice before the second quarter notice is due.

If you do provide vesting information in this first quarter’s statement, should the notice include the vesting schedule? Section 508 of PPA requires that “using the latest available information, the nonforfeitable pension benefits, if any, which have accrued, or the earliest date on which benefits will become nonforfeitable“. Providing a participant with the percent they are vested in their account would provide them with their nonforfeitable pension benefits when this information is included along with the total benefits accrued in their account.

I think it is a judgment call on whether providing the actual vesting schedule for the plan fulfills the requirement to provide “the earliest date on which benefits will become nonforfeitable”. For the average participant, the vesting schedule along with an explanation of how to determine when their benefits become nonforfeitable would be clearer than just providing the vesting schedule without any explanation.

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