I'm trying to figure out whether the new diversification notice due on 12/1/06 is necessary for a plan that has always allowed participants to freely diversify employer stock. Granted, these participants have never been eligible to exercise their right under ERISA 204(j) because 204(j) is not yet effective. On the other hand, the plan has never restricted diversification to the point where it would have violated 204(j) (if it were in existence). I'm leaning towards giving the notice since there is no harm that could come from providing it, but was looking for some input.

We decided the same thing. It is better to remind them that they can diversify any time and the importance of diversification.

Not sure about Janet and Randy's situation but what about plans that merely offer employer stock as one of several investment options but the sponsor does not make any contributions in employer securities. I ageee there is no harm in providing reminders of ability and importance of diversification but am getting serious push-back from plan administrators that do not want to send out a notice unless they absolutely have to do so. I guess I'm thinking it is not absolutely necessary in that case. Thanks

I agree Chaos, if the participants have the right to get in or out of company stock at anytime the notice doesn't need to be sent. Am guessing sponsors who offer stock don't want to send notice that implies that company stock isn't a proper investment.

According to IRS Notice 2006-107, issued yesterday, nobody needs to give the notice prior to 1/1/07. IRS says DOL has agreed to the extension. The IRS notice probably answers the other aspects of the original question too. See 2006-51 IRB 1.