Navigating ERISA’s Comprehensive Plan Document Disclosure Rules

ERISA requires detailed disclosure about most facets of your retirement plan. Understanding the rules may help guide you and your plan administrator if you’re not sure whether to provide a requested document.

What’s Required?

ERISA requires that, on written request of any participant or beneficiary, the plan administrator furnish a copy of the latest updated summary plan description (SPD). You must also provide the latest annual report, any terminal report, the bargaining agreement, trust agreement, contract, or other instruments under which the plan is established or operated. The “other instruments” requirement is the tricky part and often the subject of litigation and new regulatory interpretation.

How About Some Examples?

In its 2013 Reporting and Disclosure Guide for Employee Benefit Plans, the Department of Labor (DOL) provides the following information (applicable to both retirement and welfare benefit plans):

  1. SPD

Who can request: Plan participants and beneficiaries receiving pension benefits.

When: Automatically provide to new participants within 90 days of becoming covered by the plan. You must provide updated SPDs every five years if the plan has been amended; otherwise every 10 years.

  1. Summary of material modifications

Who can request: Plan participants and beneficiaries receiving pension benefits.

When: Automatically no later than 210 days after the end of the plan year in which you adopt the change.

  1. Summary annual report

Who can request: Plan participants and beneficiaries receiving pension benefits.

When: Automatically within nine months after the end of the plan year, or two months after the due date for filing Form 5500.

  1. Plan documents

Who can request: Participants, beneficiaries and the DOL.

When: No later than 30 days after receiving a written request. In addition, the plan administrator must make copies available at its principal office and certain other locations.

  1. Notification of benefit determination (explanation of benefits)

Who can request: Participants, beneficiaries or authorized claims representatives.

When: Requirements vary by plan type and benefit involved. Generally, when a claim is wholly or partially denied, the plan administrator must notify the employee within a reasonable period of time, but not later than 90 days.

What Do the DOL and Courts Think?

The DOL periodically issues “advisory opinions” on the nuances of disclosure requirements. Although these opinions respond to specific disclosure requests, practitioners can rely on the opinions as indications of how the DOL might respond in a similar situation.

One such advisory opinion stakes out a broad interpretation of ERISA disclosure requirements. Although it involved a health plan, the principle it contains applies to other ERISA plans. According to the DOL advisory opinion, any document or instrument that specifies procedures, formulas, methodologies or schedules to be applied in determining or calculating a participant’s or beneficiary’s benefit entitlement under an employee benefit plan is an instrument under which the plan is established or operated, regardless of whether the information is contained in a document designated as a plan document.

However, another advisory opinion ruled that only third-party administrator contracts that establish, amend or constitute part of an employee benefit plan or otherwise are instruments under which the plan is established or operated are subject to mandatory disclosure. More recently, the U.S. Court of Appeals for the Sixth Circuit ruled that, if a party requests information about a particular feature of a benefit plan but inadvertently neglects to request a document that would shine light on the issue at hand, the employer should furnish it anyway if it can reasonably be expected to know the unrequested document is pertinent.

Beware of Penalties

Administrators failing to comply with disclosure requirements can face serious penalties. Under ERISA, any administrator who fails or refuses to comply with a request which the administrator must furnish may be personally liable for a statutory amount. However, where a failure or refusal results from matters reasonably beyond the administrator’s control, the court has discretion to temper the fine. Consult your benefits professional for more information about requested disclosures.

Additional Pension Plan Disclosures

Document disclosure rules apply to all types of retirement plans. And if you have a pension plan, the Department of Labor has additional disclosure requirements. For example, pension plans must provide:

  • A periodic pension benefit statement,
  • A statement of accrued and nonforfeitable benefits,
  • A suspension of benefits notice,
  • A notice of transfer of excess pension assets to a retiree health benefit account,
  • A notice of significant reduction in future benefit accruals,
  • A notice of failure to meet minimum funding standards,
  • A notice of blackout period for individual account plans,
  • A qualified default investment alternative notice, automatic contribution arrangement notice and annual funding notice,
  • Participant plan and investment fee disclosures, and
  • Plan service provider disclosures.

Be aware that this isn’t an exhaustive list of required disclosures.

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