I have been in the business for 29 years and I still come across questions that I consider "basic." I must tell you that the occurrence of such events make me extremely uncomfortable. In any event, allow me to ask a "basic" question.

ERISA §105 and §209 require that the plan administrator to furnish certain benefit information to a participant or beneficiary of a employee pension benefit plan. Basically the statute identifies three types of disclosures:

1)Benefit statement upon request in writing;
2)Automatic disclosure of benefit statement upon termination or break in service;
3)Statement upon filing of a SSA form as part of a Form 5500 filing.

After rereading the ERISA regulations after all these years, I distinctly get the impression that statement # 3 is different from statements #1 and #2. It would seem that statement #3 would be required to be distributed at the time the SSA is filed even thought the participant may have already received a statement upon termination.

I have always thought of statements #2 and #3 as being the same. Now I am having second thoughts.

I ask for your valued opinion. Do you treat statements #2 and #3 as being separate and independent?

Not sure I understand the Q. I believe 2 and 3 are distinct, but the timing of such notification is the same.

HOLY COW!!

When did #3 happen????

Ok, if it is 'old', we went through an audit where we were questioned on what I thought was #2, and we were well covered there.

Auditor never asked about #3, but as long as a participant has a balance we produce 'normal' statements so I think we would be covered. I hope.

As I understand (3), it is a notice on the SSA, not in addition to the SSA.

I posed my question to a respected and well known ERISA attorney. I wanted to share his response:

"Treas. Reg. §301.6057-1(e) requires that the sponsoring employer must provide to each participant whose information is to be included on Form SSA " a statement describing the deferred vested retirment benefit to which the participant is entitled" and that this is to be accomplished no later than the date on which any Schedule SSA reporting information with respect to that participant is required to be filed. It seems to me that the timely provision of such information in compliance with ERISA §105© meets the requirements in the case of a defined benefit pension plan - because the information as to accrued benefit and vested percentage will not change from the time of the separation form servie (when you provide the information in notive #2 referenced in your inquiry) to the time of inclusion on Form SSA, and it is provided before (in some cses well before) the SSA filing due date.

Turning to defined contribution plans, there is an issue simply because the value of the participant's account at the time of SSA reporting is almost certainly going to be different than the value of the participant's account at the time that separation from service occurs. Thus, the data as to value of accopunt presented in your notice #2 (if notice #2 is delivered promptly after separation from service and before the valuation date to be reflected on Form SSA) will probably differ from the data that would be provided to the participant in any notice that is prepared at the time of the SSA filing (notice #2 referenced in your inquiry). Does this require an addition notice (notice #2) when the SSA is filed?

A third notice is NOT conventional practice. if the second notice describes the benefit to which the participant is entitled not only as to specific dollar amount, but also as a fixed (vested) percentage of a variable account balance, and state that the account balance to be reported on Form SSA will reflect net investment changes, charged expenses, and distributions and wihdrawals from the time of separation from serivce to the SSA reporting date, you will have done what most employers do (or more!). Are you in literal compliance with the regulations? I would say "yes" (although the IRS or DOL could take a different position) because you have already delivered to the participant prior to the SSA filing due date, to quote Treas. Reg. §301.6057-1(e) "the information filed WITH RESPECT TO THE PARTICIPANT in Schedule SSA" - unless the participant's name or social security number has changed after the date of notice #2 and before the SSA filing date. If you read the regulation to include the concept of "information filed with respect to the participant" also information with respect to the participant's account balance, then literal compliance would require that your notice #3 be sent to the participant since that specific dollar information was not previously provided to the participant."

Based on all of the repsonses that have been made, I am comfortable that the "termination benefit statement" satisfies notices #2 and #3, especially in light that this seems to be the accepted practice in the industry.

Thanks.

Perhaps this is why the instructions to Schedule SSA indicate that "[f]or defined contribution plans, enter the value of the participant’s account at the time of separation."