The Employee Retirement Income Security Act (ERISA) imposes certain responsibilities on the administrators of most employee benefit plans, including disclosure and notice requirements. In addition to certain basic disclosure and notice requirements, there are requirements that specifically pertain to pension plans.
The most basic disclosure requirement that applies to a pension plan provides for individual benefit statements to plan participants and beneficiaries. Individual benefits statements should include total accrued benefits and total nonforfeitable pension benefits. If there are no nonforfeitable pension benefits, the statement should indicate the date on which the benefits will become nonforfeitable. A plan is generally required to respond to a written request for an individual benefit statement within 30 days but not more than once in any calendar year.
If a plan participant's pension benefits payments are being suspended during employment or reemployment, the participant should receive notice of the suspension during the first payroll period in which the suspension goes into effect. If a plan has excess pension assets, it is allowed under the law to transfer some assets to a health benefit account as long as the pension account remains fully funded. The employer sponsoring the pension plan from which the transfer is made must notify the Secretary of Labor, any employee organization representing plan participants, and the plan administrator. The plan administrator in turn must notify each participant of the transfer. All notices must be given within 60 days of the transfer.
Domestic Relations Issues
Under certain circumstances, a state court or agency may issue a domestic relations order in relation to a child support arrangement, alimony payments, or disposition of marital property of a plan participant that creates or recognizes the right of someone other than the plan participant--referred to as an alternate payee--to receive some or all of the pension benefits ordinarily payable to the participant. The order is a qualified domestic relations order for the purposes of ERISA if it meets certain requirements. The plan administrator must promptly notify the participant and alternate payees that are the subject of a domestic relations order of the receipt of the order and of the procedures used to determine whether the domestic relations order is qualified. Once a determination is made as to whether the order is qualified, the participant and alternate payees must be notified within a reasonable time.
If an ERISA-governed pension plan is amended such that there will be a significant reduction in future benefit accruals or the elimination or a significant reduction of an early retirement benefit, notice of those amendments must be provided to participants, alternate payees under a qualified domestic relations order, and employee organizations within a reasonable amount of time before the plan amendment goes into effect. If an employer is to fail to make a required installment or other scheduled plan contribution such that the applicable minimum funding standard has not been met, plan participants, beneficiaries, and alternate payees under qualified domestic relations orders must be informed within 60 days of the contribution date.
If temporary restrictions--known as a "blackout" period--are to be imposed on an individual plan participant preventing that participant from directing or diversifying his or her pension assets, from obtaining a loan, or from receiving distributions, the affected participant and beneficiaries must receive between 30 and 60 days advance notice. Copyright 2010 LexisNexis, a division of Reed Elsevier Inc. |