PPA Participant Notices
The Pension Protection Act of 2006 modified Participant Notices, when they must be given and what must be included. The following information is to help guide you on the requirements for defined contribution plans. See the Department of Labor Field Assistance Bulletin 2006-03 http://www.dol.gov/ebsa/regs/fab_2006-3.html for more detailed information.
Information that must be included on statements to participants:
- Account balance for all investments
- Vested Balance for all sources
- Permitted Disparity or Floor Offset language
- Investment Advice language for Diversification
- Investment Limitations
- Department of Labor website
Will you be providing the information all at the same time and in the same notice?
- No, you will need to provide a notice that states what information will be provided, who will provide the information and when.
- Yes, you only need to provide the one notice.
Will a third party such as an investment company be providing any of the required information to the participants?
- No, you will need to provide all information.
- Yes, you will need to provide a notice that states what information will be provided, who will provide the information and when.
Does the plan provide for any or all participant investment direction?
- No, you need to provide the above information annually.
- Yes, you need provide the above information on quarterly statements.
Does the plan have a permitted disparity/integrated formula or allocation?
- No, you do not need to include the Permitted Disparity Language
- Yes, you need to include the Permitted Disparity Language.
Does the plan have a floor offset provision, including Davis-Bacon offsets?
- No, you do not need to include the Floor Offset Language
- Yes, you need to include the Floor Offset Language.
Does the plan have any restrictions on investing such as investment choices, timing or frequency?
- No, you do not need to provide the Investment Limitation language
- Yes, you need to provide detailed specifications on what those limitations are, including a list of the investment choices.
Timing of Notices:
When must the notice for multiple providers be issued?
- This notice must be provided in a reasonable time prior to the first statement deadline.
When must the annual statements be provided?
- No more than 45 days after the end of the calendar year, even for fiscal year plans. February 14, 2008 is the first due date for the annual statements.
When must the quarterly statements be provided?
- No more than 45 days after the end of the calendar quarter, even for fiscal year plans. May 15, 2007 is the first due date quarterly statements.
Sample Language:
The Department of Labor will issue model language by August 2007. Below are samples of language that may be used for the statements. At this time, the only thing that has been released by the Department of Labor for good faith compliance is the Investment Advice for Diversification. The additional samples have been provided courtesy of Adam C. Pozek, Swerdlin & Company and Ilene H. Ferenczy, The Law Offices of Ilene H. Ferenczy, LLC.
Multiple Notices:
{Record-keeper Name} will provide you with an additional statement describing your account in the plan. That statement will include information about the different types of contributions (salary deferrals, match, profit sharing) in your account as well as the manner in which those amounts are invested.
Permitted Disparity/Integrated Contributions:
The Plan includes provisions allowing additional contributions to be made for participants earning in excess the dollar limit established annually by the Social Security Administration to determine Social Security benefits ($97,500 for 2007). Such additional contributions are designed to offset the lower contributions made to Social Security on behalf of affected employees. Any such contributions will be determined each year by the company.
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