QKA 2 Unit 8 Plan Disclosures Flashcards
What is the primary document provided to plan Participant’s about the 401(k)?
The SPD, a.k.a. summary plan, description
Who needs to get the SPD?
Employees, who have satisfy the eligibility requirements
Terminated employees with account balances
The SPD should be written in a manner that is reasonably expected to be understood by the average participant. The document should do the following:
Avoid technical jargon
Avoid complex sentences
Use examples and illustrations
Provide a table of contents
The SPD is required to be provided to non-English-speaking participants if they satisfy the “substantial number”requirement. What is the substantial number for small plans? What is the substantial number for Large Plans?
Small plans: 25%
Large plans: the lesser of 10% of participants or 500
When is the SPD required to be provided to New Plans?
No later than 120 days after the plan effective date or adoption of the plan
For ongoing plans when must the SPD be provided to new hires?
No later than 90 days after they become eligible
If you have a one month eligibility to defer and a one-year wait for employer contributions, when is the SPD required to be provided?
You would need to provide the SPD on the earliest entry into the plan
Does the SPD have to be provided each year?
It must be provided every five years if there have been amendment made to the plan
Or every 10th year, if no amendments have been made
What is often provided to participants instead of an SPD when changes have been made to a plan?
The summary of material modifications
Do SMMs have to be provided to retired Participant beneficiaries who receive benefits for vested separated, Participant?
Not if the modification does not affect them
When should you provide the SMM to Participants?
Best practices, is prior to the change
The law requires no later than 210 days after the close of the plan year in which the amendment was adopted
What documents does ERISA require a plan provider to make available for examination upon request from Participants or beneficiaries?
The plan document
SPD
Form 5500
Trust agreement
Other documents, under which the plan is established or operated
If a participant or beneficiary has requested documents related to the plan for examination, what time frame does ERISA require them to be provided in?
Can a fee be charged for printing?
How are copies provided?
30 days following a written request
A reasonable charge for printing copies may be assessed
Copies must be made available for examination at his principal office and certain other locations
What parties are required to provide the 408b2 Client fee disclosure to the Plan Fiduciaries?
Who is included in this?
Covered service providers that are paid indirectly out of plan assets including:
TPAs
Recordkeepers
Investment Providers
Insurance Providers
The 408B2 fee disclosure should list, the following 5 items: FRISC
1) fiduciary services?
2) recordkeeping fees
3) Indirect compensation
4) Services provided
5) Compensation paid by the plan
It is the responsibility of the plan fiduciaries to ensure that the fees paid are reasonable, one can do this by: (3 ways)
Comparing this information to other providers of similar services
Documenting that a comparison of the fee and Services was done
Keeping all documentation in case you were audited
The Participant fee disclosure is required under what section of ERISA?
404a5
What types of employer plans are not required to provide Participant Investment Disclosures?
SEPs
Simple IRA
ERISA exempt 403B
(Unqualified plans)
How frequently should the Participant fee disclosure be provided?
At least annually
What are six items of general information that must be provided at least annually through the Participant Fee disclosure?
Plan Provisions
QDIA
Directions on investment instructions
List of Investment Managers
Limits on Investment transactions
Description of any SDBA
Participant fee disclosures must also provide administrative expense information which include:
Explanation of fees that may be charged
How the expenses are paid
In the Participant fee disclosure, individual expense information should include what two items:
Fees that may be charged to the individual
Fees that were actually charged
If Fees are actually charged to Participant account, how often should the information be provided to the employee?
Quarterly
Investment related information provided in the Participant fee disclosure should include what two items and how frequently should it be provided?
A listing of all investments, their performance, history, including benchmarks
All fees associated with investments
At least annually
When is a blackout notice required to be given to Participants?
30 to 60 days prior to a Plan transfer
What information should the blackout notice contain? (4 items)
Reasons for the black out
Name and contact info of the fiduciary who can answer
Investments and other rights affected
Expected date on which the blackout will begin and end
A blackout period is defined as any period of how many consecutive business days?
When money is out of the market for three business days
What are the primary means of enforcement for the SPD?
Audit
Court enforcement
Criminal penalties
Which components of Participant investment disclosures must be provided at least annually? (3)
plan
administrative
individual expense
Info Disclosed
(PAId)
Which components of Participant Investment disclosures should be provided on a quarterly basis? Which are required to be provided on request?
Quarterly: specific info about plan expenses,
individual expenses actually charged to Participant accounts
When providing fee information, the method of allocation in the 404a5 notice must be
Pro Rata or per capita
