Rule Change Allows More Time to Provide Annual Disclosures to Employees in 401(k)-Type Retirement Plans

Rule Change Allows More Time to Provide Annual Disclosures to Employees in 401(k)-Type Retirement Plans

A new rule issued by the U.S. Employee Benefits Security Administration (EBSA) changes the requirement that annual disclosures for participant-directed individual account plans (e.g., 401(k) plans) be made at least once in any 12-month period to at least once in any 14-month period.

The requirement that administrators of 401(k)-type plans disclose annually certain information about plan investment options to participants and beneficiaries (in addition to disclosing such information on or before the date they can first direct their investments) became effective in 2012. The information that is required to be disclosed, which helps workers make informed plan and investment decisions about their retirement savings, remains unchanged.

The new rule is expected to become effective on June 17, 2015. Until that time, EBSA will treat a plan administrator as satisfying the current “12-month rule” if disclosures are furnished within the new 14-month deadline, provided that the plan administrator reasonably determines that using the extended deadline will benefit participants and beneficiaries. This relief is in addition to the “re-set” relief previously granted by the agency, which allowed a plan to reschedule the timing for the annual distribution of the required investment comparative chart one time, for either the 2013 or 2014 chart.

Visit the section on Retirement Plan Fee Disclosure Rules within the Client Resource Center HR Library for more information.