When it comes to 401(k) plans, plan sponsors have a fiduciary responsibility to distribute a variety of documents and disclosure notices. Imposing this responsibility on plan sponsors helps ensure that participants have the necessary information about the plan provisions and investment options in order to make informed and timely decisions for their personal financial wellness. Since the intricacies and responsibilities relating to disclosure notices can seem daunting for a plan sponsor, some qualified 401(k) providers supply the mandated notices for the plan sponsor to distribute. However, given that not all 401(k) providers offer the same quality of compliance services, it is in the plan sponsor’s best interests to understand the extent of support that is covered with the provider’s ongoing administration. Plan sponsors can further minimize their fiduciary liability and administrative burden by delegating responsibilities to a 3(16) fiduciary. In this arrangement, the 3(16) fiduciary accepts the responsibility and fiduciary liability for some or all of the day-to-day administrative functions.
So, what are these disclosures and when should they be made available? The table below outlines the general annual notices and deadlines for distribution. Financial advisors and plan sponsors should always work with qualified plan consultants to ensure that the plan is meeting all compliance regulations that pertain to their specific plan. There are other notices that may be required depending on the specifics of the 401(k) plan. It’s important to stay on top of these required notices to avoid penalties and to ensure that employees have up-to-date information to make informed investment choices.
| Required Notice | When to Send |
| Summary Plan Description (SPD) Summary of a plan’s provisions (eligibility, contributions, vesting, distributions, plan contact information). | Within 90 days of eligibility |
| Summary Annual Report (SAR) Financial snapshot and summary of the 5500. | Calendar Plan Year: 9/30 (12/15 with 5500 filing deadline extension) Non-calendar-year plans: 2 months following the deadline for filing Form 5500 |
| Annual Fee Disclosure Notice Discloses plan fees for all covered service providers and provides plan investment information. Plan investments must report expense ratios as well as performance information. | Within 90 days of an employee becoming eligible for a plan All participants receive within 14 months of the date that they received the previous notice |
| Safe Harbor Notice For safe harbor plans – discloses the plan’s contribution formula (matching or non-elective), withdrawal/vesting provisions, and other key information about the plan. | At least 30 days (and not more than 90 days) before the beginning of each plan year.
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| –Automatic Contribution Arrangement (ACA) –Qualified Automatic Contribution Arrangement (QACA) – Eligible Automatic Contribution Arrangement (EACA) For plans with automatic contribution arrangements – informs eligible employees of the plan’s automatic contribution rates, increases, employee rights, and how to make contribution/investment changes. | At least 30 days (and not more than 90 days) before the beginning of each plan year. |
| Qualified Default Investment Alternative (QDIA) Describes the plan’s default investment and when contributions would be invested in the plan’s default investment. | At least 30 days (and not more than 90 days) before the beginning of each plan year. |