401(k) Summary Annual Report
Carolyn Kerr
2 Posts
I am trying to find documentation of the requirement that an employer SHOULD (must) send a Summary Annual Report to all 401(k) plan participants within a certain timeframe. Is it a rule, statute, guideline? Is it part of ERISA and under the supervision of the DOL?
Comments
The requirement to distribute SARs is part of the 5500 filing process. The purpose of the SAR is to inform participants of the plan's financial status. The SAR does not need to be filed with the IRS or the DOL. You need to distribute the SAR to all plan participants, even if they're no longer actively employed, or to any beneficiaries (like you might have with a QDRO account.)
401(k) SARs must be distributed within 9 months after the close of the plan year. If you have been granted an extension of time to file the 5500, you have until the end of two months after the filing date. For example, if you have a calendar year plan, the normal filing deadline for the 5500s is 7/31. So, the SAR is due two months after that - 9/30. If you are granted a filing extension, the 5500 becomes due 10/15, therefore the SAR is due by 12/15.
Here are some distribution methods:
- Hand deliver to emloyees.
- Insert in an employee newsletter (the front page must state that the SAR is enclosed.)
- First class mail
Leaving a stack of SARs at a common worksite is not an acceptable method of delivery.
I prepare the SAR as soon as I finish the 5500 for the plan year. I keep a copy of it with my 5500, along with notes as to how I distributed the SAR. Most of our employees are in remote locations, so I keep a copy of all the mailing labels with the SAR. That way, if we are ever subject to audit, I have the proof of distribution along with the SAR.
I use Relius (formerly Hyperprep) to prepare my 5500, and they also have a SAR prep program that takes the data right from the 5500.
Remember, too, that any welfare plans covered by ERISA must also distribute SARs.
I have a book called "Quick Reference to ERISA Compliance" which I can't live without. There is a whole chapter on SARs, and an IRS-approved example of a SAR is included. I highly recommend it.
Hope this helps!
>
>>I have a book called "Quick Reference to ERISA Compliance" which I
>can't live without. There is a whole chapter on SARs, and an
>IRS-approved example of a SAR is included. I highly recommend it.
>
>Hope this helps!
Jen, can you tell me more about this reference? Publisher, etc.? I'd like to get a copy.
Carol
Good luck!