The Department of Labor recently published, in Field Assistance Bulletin 2009-01, new guidance on the annual funding notice required for defined benefit plans.
The annual funding notice, introduced by PPA, replaces the summary annual report for defined benefit plans (defined contribution plans must still prepare a summary annual report). The FAB details the information that must be included in the notice, and provides model notices for both single employer and multi-employer defined benefit plans. Among other items, the notice must include the plan’s funding percentage, a statement of the value of the plan’s assets and liabilities, a description of how the plan’s assets are invested as of certain dates, and a description of the benefits under the plan that are eligible to be guaranteed by the Pension Benefit Guaranty Corporation (PBGC).
Unfortunately, the model notice is up to six pages long and likely to be confusing to participants. Although the FAB provides that use of the model is not mandatory, it is anticipated that most actuarial consultants will use the model as a starting point to assure compliance with the revised disclosure requirements.
Plans must furnish the annual funding notice within 120 days of the end of the plan year. For calendar year plans, this means the notice must be provided no later than April 30, 2009. Small plans, generally those with no more than 100 participants, may delay distributions of the notice until the earlier of the due date or the actual filing date for the plan’s Form 5500. The notice generally must be provided to each plan participant and beneficiary, the PBGC (if liabilities exceed assets by more than $50 million), each labor organization representing plan participants, and, for multiemployer plans, each employer obligated to contribute to the plan.