New Guidance Issued For Timing of Some Individual Account Benefit Statements

The Department of Labor’s Employee Benefits Security Administration (EBSA) has issued new guidance of the timing of participant benefit statements for plans in which participants cannot direct their investments.

Field Assistance Bulletin No. 2007-03provides that plan administrators of individual account plans that do not allow for participant direction of investments will be treated as acting in good faith compliance with a reasonable interpretation of section 105 of the Employee Retirement Income Security Act (ERISA), as amended by the Pension Protection Act of 2006 when statements are furnished to participants and beneficiaries on or before the date on which the Form 5500 Annual Return/Report is filed by the plan for the plan year to which the statement relates.

The bulletin said the statements should in no event be provided later than the date, including extensions, on which the Annual Return/Report is required to be filed by the plan.

Previously, the EBSA had established in Field Assistance Bulletin 2006-03 that, pending the issuance of further guidance, the furnishing of pension benefit statement information not later than 45 days following the end of the relevant period (calendar quarter or calendar year) will constitute good faith compliance with the requirement to automatically furnish pension benefit statements by individual account plans. The guidance was revised because EBSA said compliance with the earlier 45-day good faith period appears to be impossible or very expensive for many of these plans unless the benefit statements were based on data from the end of the prior plan year.

EBSA said many individual account plans that do not permit participants and beneficiaries to direct the investment of assets in their individual accounts may not be able to comply within the 45-day period as many of these plans are profit-sharing plans. That means the sponsors of those plans do not contribute profit-sharing contributions until after the sponsor’s business tax return is completed.

Similarly, non-participant directed individual account plans sponsored by partnerships cannot make contribution determinations until completion of the partnership tax return.