As a plan sponsor, you are required to provide a number of communications and disclosures to the plan participant. These disclosures are critical to ensuring transparency, protecting participants, and helping participants make informed decisions about their retirement savings. At Watkins Ross, we’re committed to helping our clients stay organized, compliant, and confident in supporting their participants.
As such, we’ve compiled a list of the key required notices and disclosures for Defined Contribution (DC) plans, along with the deadlines for distributing each.
Be sure to follow along for parts 2 and 3 of this series for more helpful information on handling plan disclosures and notices!
Understanding DC Plan Participant Best Practices:
Providing DC notices and disclosures is an important part of the plan sponsor’s fiduciary responsibility. They are also required by regulatory bodies, such as the Department of Labor (DOL), the Internal Revenue Service (IRS), and ERISA (the Employee Retirement Income Security Act). Plan sponsors should take care to ensure compliance with these requirements to both protect plan participants and avoid potential penalties.
Recommended best practices include:
- Keep a copy of the notice or document in your plan records and record when these were provided.
- Set up calendar reminders to track deadlines (and ensure this responsibility is transferred to new staff during transitions).
- Always confirm with your service providers who will prepare these notices, and who will distribute the notices.
Be proactive in asking your service providers if they will prepare and distribute these notices to participants. Some recordkeepers will automatically distribute, while others will do so for an additional fee. Ultimately, the plan sponsor is responsible for ensuring notices are provided and their distribution is documented, so communication here is key.
For more best practices, be sure to follow along for Part 2 of this guide.
Basic Plan Participant Disclosure Requirements for Defined Contribution Plans
Not all participants are required to receive each notice. The following chart explains what information is provided and the deadline for each notice or document.
| Notice or Document | What Information is Provided | Deadline |
| Summary Plan Description (SPD) | The SPD is a document that outlines the terms of the retirement plan, including eligibility, benefits, vesting schedules, contribution requirements, investment options, and distribution procedures. | Initial distribution: Must be provided to participants within 90 days of becoming a plan participant. Updates: Any significant changes must be provided within 210 days after the end of the plan year in which the change occurs (or within 30 days of the change if it involves a material modification). If a participant requests the SPD, it must be provided within 30 days of the request. |
| Summary of Material Modifications (SMM) | This notice is provided when the plan’s terms or provisions change. It informs participants of any changes in eligibility, contribution formulas, or other material modifications. | Plan participants must receive the SMM within 210 days after the end of the plan year in which the change is adopted. |
| Automatic Enrollment Notice Includes:ACAQACAEACA | This notice explains how automatic enrollment works, including the default contribution rate and default investment option. It also provides instructions on how participants can opt out or change their contribution rates or investment elections. | Initial notice: Must be provided to new participants within a reasonable time before they are automatically enrolled, but no later than 30 days before the automatic enrollment takes effect. Annual notice: Typically provided annually, with the exact timing depending on the plan’s design. |
| Qualified Default Investment Alternative (QDIA) Notice | This notice applies to plans that use a QDIA for participants who do not make an investment selection. It explains the plan’s default investment options and how participants can opt out or choose a different investment option. | Initial notice: Must be provided at least 30 days before the first contribution is made to the plan. Annual notice: Must be given to participants at least 30 days before the beginning of each plan year. |
| 404a-5 Participant Fee Disclosure | This disclosure provides participants with information on plan-related fees, including both administrative fees and investment-related fees. It also provides participants with performance data for each investment option in the plan, including historical returns over multiple time periods. | Newly eligible participants must receive this disclosure within 90 days of becoming eligible for the plan. Must be distributed annually to all participants, within 14 months of the previous notice. If there are any changes in the plan fees, a new notice must be provided to participants within 60 days of the change. |
| 401(k) Safe Harbor Notice | This notice explains the employer’s safe harbor contribution (either matching or non-elective) and its impact on the plan’s testing requirements. | Must be distributed at least 30 days before the beginning of each plan year, but no more than 90 days. |
| Blackout Period Notice | A blackout period occurs when participants cannot make changes to their accounts, typically due to a plan transition (e.g., changing recordkeepers or plan investments). | Must be distributed at least 30 days before the start of the blackout period. If the blackout period lasts more than 3 consecutive business days, participants must also be informed of the reason for the blackout and its expected duration. |
| Investment Option Change Notice | If the plan adds or removes investment options, this notice informs participants about the changes and how it may impact their accounts. | Must be provided at least 30 days before the change takes effect. |
| Benefit Statements | This statement provides participants with information about their account balance, including contributions, investment performance, and vested status. | Quarterly if the participant has an individual account balance. Annually if the participant does not have an individual account balance (e.g., trustee directed accounts). |
| Summary Annual Report (SAR) | A summary of the information reported on Form 5500. | Within 9 months after the end of the plan year, or within 2 months after the extended due date of the Form 5500 filing (if an extension is filed). |
Other Plan Participant Notices
Beneficiary Designation Reminder
This reminder encourages participants to review their beneficiary designations. Beneficiary information often needs updating after life events like marriage, divorce, or the birth of a child. This helps ensure the participant’s benefits are distributed according to their wishes in the event of death.
Deadline: While this isn’t required on a set schedule, many plans encourage periodic reminders at least annually.
Qualified Domestic Relations Order (QDRO) Notice
This notice informs participants of the plan’s procedures in the event of a QDRO (a court order for the distribution of plan benefits, typically due to divorce). It must be provided when the plan receives a QDRO.
Deadline: There is no fixed deadline for proactive distribution of this notice, but it should be provided promptly when the situation arises.
Hardship Withdrawal Notice
This notice provides participants with the rules and procedures for taking a hardship withdrawal from the plan. It outlines the types of qualifying events that allow for a hardship withdrawal.
Deadline: Notice can be provided when a participant inquires about taking a hardship.
Flexible Match Notice
As part of the new document restatement, the IRS has a new requirement for plans that utilize the “flexible” discretionary match feature in their adoption agreement. A “summary” must be communicated to participants who are entitled to receive the allocation of the match.
Deadline: Notice must be provided within 60 days after the employer makes the final flexible discretionary match contribution for the plan year. *Can also be done any time before that, if the employer already knows what is going to be contributed.
Tax Notice
When a participant becomes eligible for a distribution (e.g., due to retirement, termination of employment, or age 59 ½), they must receive a notice explaining the distribution options available to them. This includes lump sum, annuity, and rollover options.
Deadline: Notice must be provided at the time of distribution before the distribution is processed.
New Simplified Disclosure Rules for Plan Participants in DC Plans
It’s important to note recent legislation which may change how some plan sponsors handle notice distribution. SECURE 2.0 has provided optional requirements for plan sponsors when distributing notices to plan participants. Previously, all required notices were required to be distributed to all plan participants, regardless if they had enrolled in the plan or had an account balance.
Effective for plan year beginning after December 31, 2022, DC plan sponsors have the option to exclude certain employees from such notices. This pertains to employees who are not participating, and with no account balance, providing the following conditions are met:
- Participants received a copy of the Summary Plan Description and all required notices when first becoming eligible for the plan
- Participants receive a separate annual notice reminding them they are eligible for the plan. This notice must be provided within a reasonable period before the beginning of each plan year.
- Participants are provided any notices upon request.
Although plan sponsors now have the option to exclude some participants from receiving certain notices, the task of segregating participants into two categories – and tracking the notices – may be too much of an administrative burden. It may just be easier to supply all notices to all participants.
Manage Notices and Disclosure with Confidence
Keeping up with participant notice requirements is a complex yet essential part of retirement plan administration. Whether you choose to follow the standard approach or take advantage of SECURE 2.0’s optional changes, understanding your obligations is key to staying compliant and supporting your participants effectively.
If you have any questions about notice requirements or need help navigating these responsibilities, our team at Watkins Ross is here to help. Contact us today to ensure your plan stays on track.
