Pension Protection Act Blog

Several conversations today all circled around to the same point - how to map out the notices currently required to be provided to participants and beneficiaries into a coherent schedule so that the required information is provided by the required deadline. The Pension Protection Act added several new notices, including pension benefit statements, to the already existing notices, such as safe harbor notices. Juggle this with the requirements and timetable contained in Revenue Procedure 2005-66 on restating plan documents for EGTRRA, and submitting the individually designed plans for determination letters, and mistakes may become inevitable unless great care is taken.

The Dept. of Labor recently issued a Request for Information on Fee and Expense Disclosures to Participants in Individual Account Plans. DOL has requested “views, suggestions and comments” for rules on how to ensure participants and beneficiaries “have the information they need to make informed decisions about the management of their individual accounts and the investment of their retirement savings”. Responses to this RFI should be submitted on or before July 24, 2007.

The RFI specifies 19 items that the DOL is examining, including comments on “what basic information to participants need to evaluate investment options” under the plan and what information participants need to evaluate fees and expenses. Item 5 is:

5. How is information concerning investment options, including information relating to investment fees and expenses, communicated to plan participants, and how often? Does the information or the frequency with which the information is furnished depend on whether the plan is intended to be a section 404(c) plan?

Information designed to help participants make intelligent and informed decisions on investing the funds in their accounts is always a good thing. How many different notices can a participant receive in one year is something the IRS and DOL seem to have decided to experiment with. One part of the equation is how much in fee increases will be caused by the increased notices associated with the Pension Protection Act and the guidance issued after August 17, 2006. Maybe a really truthful comment to the RFI is a statement to participants about how much they were paying in plan expenses before the Pension Protection Act, and how much they are paying in fees after the Pension Protection Act, and what portion of the fee is directly attributable to all of the notices now required to be provided to participants.

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