Inform and educate plan participants

Plan fiduciaries must ensure that participants receive timely and accurate information about the plan. Some participant communications educate them as to plan features and changes, while others explain the importance of saving and diversification. All participant communications, however, must be clear and understandable.

In addition to ensuring that participants have been educated on the importance of achieving a more secure retirement, additional materials are required to satisfy ERISA rules including:

• The Summary Plan Description (SPD), summarizing plan provisions and administrative procedures
• The Annual Funding Notice which discloses such items as the plan’s funding percentage for the plan year to which the notice relates, a statement of the value of the plan’s assets and liabilities, a description of how the plan’s assets are invested, what the Pension Benefit Guaranty Corporation (PBGC) guarantees for benefits, and who to contact to gather additional information about the plan.
• Annual Benefit Statements reflecting the individual participant’s actual accrued benefits under the terms of the plan, or a Notice of Availability detailing where to request such detail on a participant’s benefits
• Suspension of Benefits Letters (if applicable)
• QPSA Notices and Waivers (if applicable)
• Right to Defer Notices

Certain plan activities and even participant activities will also require the distribution of additional “notices” and information to plan participants. If any plan amendments are adopted that change the design of the plan as described in the SPD, the plan sponsor must distribute a Summary of Material Modifications (SMM). Other required notices and notifications are tied to individual participant actions, such as notifications that a participant must receive a Required Minimum Distribution (RMD). To help plan fiduciaries determine which notices apply to their plans, Prudential publishes an Annual Compliance Checklist that lists participant reporting and disclosure requirements. The checklist describes each requirement, its due date, and the level of support offered by Prudential.

As part of our document services, Prudential can draft SPDs and SMMs for sponsors’ consideration in communicating with employees. Similarly, you can choose to use Prudential’s Actuarial Services and receive a Sample Annual Funding Notice that you can distribute to your plan participants. Varying levels of support are available to help fiduciaries draft and deliver required participant notices.

Lastly, when distributing any type of participant notice or disclosure, plan sponsors should be aware of the distribution methods available under related regulations and make informed decisions as to which methods to use for specific groups of recipients (e.g., active employees vs. terminated employees vs. beneficiaries, employees with daily access to computers vs. those without such access). Available distribution methods may include posting in a centralized place (physical or virtual) or delivery via hard copy or electronic means.