The department said initially providing newly required benefit statement information in the form of multiple documents from multiple entities (i.e. recordkeeper, mutual fund company, plan sponsor) is allowable as long as participants are also provided an explanation of the information in language they can understand. Similarly, the department allows for initially providing the new information electronically with an explanation to participants as well.
With regard to the timing of issuing participant benefit statements complying with new provisions regarding the type of information that must be included, the department said the furnishing of information not later than 45 days following the end of the calendar quarter or calendar year (as required by the Act) will constitute good faith compliance with section 105 of the PPA.
Plans which allow participant direction of investments are required to provide the statements at least quarterly, while plans that do not allow participant direction of investments are required to provide the statements at least annually. The bulletin said a participant loan provision does not constitute allowance of participant direction of investments by the plan.
Concerning timing of the notice of participant rights to diversity employer securities, for plans that already provided such rights to participants prior to the new rule, the Department agreed providing a diversification notice in conjunction with the first quarterly benefit statement provided to participants in 2007 would constitute good faith compliance with the new requirement. The Internal Revenue Service previously issued guidance addressing timing of notice for plans that did not previously provide such rights to participants (See IRS Issues Guidance on Employer Stock Account Diversification ).
In addition, the bulletin provides language sponsors can use to satisfy the PPA requirement that benefit statements include “an explanation . . . of the importance, for the long-term retirement security of participants and beneficiaries, of a well-balanced and diversified investment portfolio, including a statement of the risk that holding more than 20 percent of a portfolio in the security of one entity (such as employer securities) may not be adequately diversified[.]”
Field Assistance Bulletin 2006-03 is here .