Plan Notice, New Orleans, LA (2026)

12/27/2021

2021 End of the Year Reminder - Annual Notices

Each year the Plan Sponsor is required to produce and distribute annual notices to plan participants. Most notices must be disseminated at least 30 days and not more than 90 days before the start of a plan year for 401k and 403b plans.
The common notices are:

• Plan Design Updates – these notices provide participants explanations of any adjustments/amendments being made to the plan for the coming year. These include but are not limited to Safe Harbor notices if the plan chooses an IRS Safe Harbor election.

• Summary Annual Report – this notice provides participants with information from the IRS filed 5500, detailing the prior year’s plan activities.

• Qualified Default Investment Alternative – this is the notice to define the plan’s default investment in the case that the participant does not choose an investment portfolio for their retirement assets.

• Automatic Enrollment Notice – communicates to participants if the plan has elected an automatic enrollment feature which may affect the participant’s contribution amounts.

• Fee Disclosure – it is required to distribute a detail of all service providers and the fees that they charge the plan assets.

• Required Minimum Distribution Notices – communication to specific participants who are required to elect a Required Minimum Distribution (RMD). Typically these are participants with a balance, who have reached 72 years old.

• Plan Correction Notices – notices to all participants explaining any required adjustments or corrections made to a plan to maintain the tax-qualified status of the plan.

These notices and/or any additional plan-specific communication must be distributed to any active or terminated employee who has a balance, no matter the size, in the plan. It is the Plan Sponsor’s responsibility not only to send these notices but to verify the receipt. Therefore, Plan Sponsors should have a documented process for participant communication that meets the Department of Labor Best Practices (Missing Participants – Best Practices for Pension Plans (dol.gov)).

Plan Notice is a retirement plan service provider offering outsourced solutions to both annual and potential midyear noticing. When a plan engages with Plan Notice, we accept all fiduciary responsibility regarding participant communication, indemnifying them of any costs or penalties generated from improper notice.

12/23/2021

At Plan Notice, we offer solutions to the majority of recommendations presented in the article “What Should We Do When Our 401(k) Plan Must Make a Distribution to Someone We Cannot Locate?” (thomsonreuters.com)

How can we improve our ongoing practices?

To minimize future problems with missing participants, the DOL’s best practices guidance encourages plans to be proactive in maintaining accurate census information. Periodically prompting participants and beneficiaries to reconfirm their contact information, regularly auditing census information, paying special attention to contact information in business transactions or when recordkeepers change, and other listed practices can help avoid missing participant searches later. Even changing the way communications are written (and addressed, if mailed) can make it more likely participants will recognize the importance of a communication and engage with it.

See our additional commentary below on how we can assist your ongoing practices in meeting these obligations.

PLAN NOTICE: As part of Plan Notice’s standard service, all retirement plan participants’ contact information is verified multiple times each year. Annually, Plan Notice conducts an active verification where each participant must acknowledge or update their contact information. Additionally, Plan Notice conducts passive verification by comparing the information provided to the retirement plan versus the USPS address database on a quarterly basis. If there is a difference between the provided address and the USPS address, the participant receives a request to confirm which address should be used ongoing. Both active and passive verifications are documented for compliance and reported to the Plan Sponsor to ensure that the plan census data remains as accurate as possible.

For more information on Plan Notice and its services, please contact [email protected]

12/21/2021

What Do We Do When Our Search Efforts Fail?

Some plan documents describe how to handle account balances when search efforts fail; others may authorize administrative committees to adopt policies for these situations. Following written policies and procedures for handling missing participants, and documenting actions taken, should help ensure consistency. Some plan provisions or policies direct fiduciaries to allocate the funds in the account among the accounts of the remaining participants, subject to restoration if the individual should reappear. Under IRS regulations, such an allocation is not an impermissible forfeiture so long as the plan is obligated to restore the missing individual’s account balance. (Thomson Reuters, ““What Should We Do When Our 401(k) Plan Must Make a Distribution to Someone We Cannot Locate?”)

PLAN NOTICE: Plan Notice does not cease attempts to locate the owner of an account until the owner is found. In the rare case that there are no alternatives after the beneficiary search has been conducted, we work directly with the Plan Sponsor or the Plan Operations Committee to determine the next best steps. With access to some of the top ERISA attorneys in the country and a full documentation of prior efforts to locate the participant, Plan Notice and the Plan can make prudent decisions regarding the funds.

For more information on Plan Notice and its services, please contact [email protected]

12/17/2021

The following article was released by Thomson Reuters on November 11, 2021, “What Should We Do When Our 401(k) Plan Must Make a Distribution to Someone We Cannot Locate?” (thomsonreuters.com)

At Plan Notice, we offer solutions to the majority of recommendations presented in the article. See our additional commentary on how we can assist you with additional search steps for larger account balances in meeting these obligations.

Additional Search Steps for Larger Account Balances. If the initial search steps are unsuccessful, searches that charge a fee may be appropriate when the account balance is large enough to justify the expense. (The fee may be charged against the account if reasonable and if the allocation method is consistent with the plan’s terms and ERISA.) Additional steps could include internet search tools, commercial locator services, credit-reporting agencies, information brokers, investigation databases, and similar services charging a fee.

PLAN NOTICE: Plan Notice believes all balances are important to owners. Therefore, rather than determining what is a “large balance” and what is not, Plan Notice provides its national location search for any participant with a balance. This means that a Plan Sponsor never has to decide which participants research.

For more information on Plan Notice and its services, please contact [email protected].

12/15/2021

What should we do when our 401(k) plan must make a distribution to someone we cannot locate?

At Plan Notice, we offer solutions to the majority of recommendations presented in the Thomson Reuters 11/11/2021 article, “What Should We Do When Our 401k Plan Must Make a Distribution to Someone We Cannot Locate? (thomsonreuters.com)

Although the DOL and IRS guidance does not offer a complete compliance roadmap, they suggest making some initial search steps:

Initial Search Steps. When a participant or beneficiary is unresponsive or you reasonably believe your contact information is inaccurate, consider taking these four steps:

(1) use certified mail (or a private delivery service with similar tracking features if less expensive.

(2) check employer records and all of the employer’s plans for up-to-date information.

(3) attempt to identify and contact the individual’s designated beneficiaries under those plans for information.

(4) use free electronic search tools such as internet search engines, public record databases, and social media. (These steps are required, in no particular order, for terminating plans.)

The DOL’s best practices guidance includes other suggestions, such as reaching out to a participant’s colleagues or union and registering the individual on public or private pension registries. The DOL suggests that privacy concerns can be alleviated if the retirement plan fiduciary asks the employer, other plan fiduciary, or beneficiary to have the missing individual contact the retirement plan. Nevertheless, employer-sponsored group health plans should not use or disclose individually identifiable information unless the use or disclosure complies with HIPAA’s privacy rules.

PLAN NOTICE: These practices, when conducted and documented, meet the DOL’s best practices. Plan Notice as a service removes this responsibility from the plan. Plan Notice disseminates plan-related information by email and first-class mail. If receipt is not acknowledged, Plan Notice conducts a national location search for the participant, sends the participant certified mail, reaches out to the participant by phone call, and attempts communication via the most recognized social media sites. If there is still not a response, Plan Notice will reach out to the participant’s documented beneficiary by the same means. Every step in the process is recorded electronically and provided to the Plan Sponsor as a compliance file proving all reasonable efforts have been made.

For more information on Plan Notice and its services, please contact [email protected]

12/13/2021

The following article was released by Thomson Reuters on November 11, 2021, “What Should We Do When Our 401(k) Plan Must Make a Distribution to Someone We Cannot Locate?” (thomsonreuters.com)

At Plan Notice, we offer solutions to the majority of recommendations presented in the article. See our additional commentary on how we can assist your retirement plan in meeting these obligations.

What should we do when our 401(k) plan must make a distribution to someone we cannot locate?

QUESTION: Each year, when our 401(k) plan makes required minimum distributions, we discover that the addresses on file for some distributees are no longer valid. We sometimes have similar problems locating beneficiaries when a participant dies. What procedures should we follow when our plan must make distributions to individuals we cannot locate? And what can we do to minimize this problem?

ANSWER: The DOL and IRS have both offered guidance about dealing with participants and beneficiaries who are unresponsive or cannot be located—i.e., “missing participants.” However, this guidance is not all directly on point or highly detailed: The DOL’s most detailed guidance relates to terminating plans (see our Checkpoint article), and the IRS’s guidance relates to audits and the correction of distribution errors. The DOL has also provided a list of best practices that ongoing plans can employ to minimize and mitigate the problem of missing participants, but those practices are only examples of steps plan fiduciaries should consider in light of the plan’s participant population, the size of the participant’s benefit, and the cost.

PLAN NOTICE: We agree that the DOL has issued a number of guidelines that are intentionally vague. However, in speaking to many 401k plan auditors, there has been increased scrutiny on the efforts that plan administrators perform regarding proper participant communication and verification of receipt by the participant. It is clear that the DOL puts the responsibility on the plan rather than the participant. As these reviews continue to grow, we recommend building proper procedures to ensure that all participants who have a balance in a company-sponsored plan are not only sent notice but that there is a verification step to prove that the participant received and acknowledged the notice.

For more information on Plan Notice and its services, please contact [email protected]

12/09/2021

Outsourcing Responsibility to Ease the Pressure on Human Resources: Part 4 of our 4-part Series.

With companies having to take on more responsibility related to their past employees as well as finding and keeping new employees, how can services like Plan Notice help?

To reduce stress on the current staff, companies should look to outsource responsibilities to experts. Utilizing recruiting companies, benefits brokers, and expert service providers reduces the amount of internal work the company staff must perform.

Recruiting services offer companies a broad pool of potential employees who are typically prescreened and ready to work. Combining an outside firm along with the internal recruiting programs will help employers address open positions faster. There are costs involved with recruiting services, however, in many cases, the need to fill important positions makes the costs reasonable.

After hiring employees, both enrolling and servicing the employee benefits programs can take valuable time from the company’s human resources team. Licensed insurance agents are commissioned by the insurance company not only to negotiate the company benefits but to provide ongoing employee support. Employers should develop systems to direct all onboarding and participant questions directly to the agent. If the agent is not willing to take on these responsibilities, the company should consider a new broker who will provide these services.

Finally, servicing ex-employees can be a large time drain for the internal administrative team. Outsourced services absorb a lot of these responsibilities. Plan Notice is one of these alternatives. By accepting the company responsibility to manage the retirement plan’s participant noticing duties, the burden to send and track this fiduciary requirement no longer falls on internal staff. Another outsourced service is COBRA administration. These services provide all the responsibilities of health insurance requirements for ex-employees. When companies delegate these time-consuming projects to outside experts, it allows their internal team to focus on the highest priority, keeping current and new employees happy.

12/07/2021

The Future Impact of The Great Resignation: Part 3 of our 4-part Series.

As the workforce begins to stabilize, post the Great Resignation, what will happen to the massive numbers of people who left their jobs or decided to change careers?

Anthony Klotz, a management professor at Texas A&M University, believes the pandemic has forced the majority of people to reflect on their long-term goals. To that end, workers are questioning whether they are happy with their current careers. Many people have made the decision to replace their job with a new career that better fits their lifestyle and makes them happier.

There are many overarching reasons for the changes:

• Searching for greater purpose and meaning at work
• Increasing their salaries
• Wanting or needing to work remotely
• Reducing burnout
• Starting their own business

As workers pursue their newly realized goals, the overall workforce faces a long-term shift in the availability of staff for each industry. For the foreseeable future recruiting will be harder, wages will be higher, and employers will have to handle higher rates of turnover.

In the final section, we will discuss how Plan Notice and other outsourced solutions can help to reduce some of the costs and stress related to the Great Resignation.

12/03/2021

What Impact Has The Great Resignation Had on Employers? Part 2 of our 4-Part Series.

While business owners’ primary focus was on keeping their companies open and safe, hiring and recruiting new team members became a significant challenge.

With fewer employees in the workforce, wage inflation for current staff took effect. Many employers were forced to offer across-the-board raises to keep their dwindling staff in place.

Companies also had to begin recruiting to fill open positions, adding human resource costs. Advertising for open positions, fees for background checks and drug screening, pre-employment tests, and at times signing bonuses are all expenses related to hiring a large number of new employees. Employee Benefit News reports employers spend 33% of a worker’s first-year salary to replace an employee.

Ex-employees produce an additional cost to company operations. The administrative expenses around COBRA for health insurance and ongoing communication to retirement plan participants add additional work for a benefits or human resources team.

In Part 3 of our series on The Great Resignation, we will discuss the future impact of this event.

12/01/2021

The Great Resignation: What Is Happening? Part 1 of our 4-Part Series.
Over the last decade, the resignation rate has consistently hovered around 2.4%. In 2021, these trends significantly changed as the coronavirus spread across the globe. As the pandemic hit the US, workers started leaving their jobs in record numbers. During the month of August 2021 alone, the U.S. Bureau of Labor Statistics reported that 4.3 million Americans left their jobs. This accounted for 2.9% of the total workforce in the United States. The mass exodus has been deemed The Great Resignation or The Big Quit.

What happened?

As daycare centers closed and schools moved to remote learning, working parents sought new jobs that offered the flexibility to work while caring for and schooling their children at home. Restaurant workers grew tired of the repeated opening and closing of their workplaces. Healthcare workers left their jobs due to burnout or fear of exposure to the virus. Overall, the Great Resignation hit virtually all industries, as employees felt their work conditions did not protect them from the virus.

The record-breaking numbers of workers changing employment sent a warning flag to retirement plan administrators. With these changes to the workforce affecting both the short-term and long-term staffing plan, employers have additional responsibilities to meet communication requirements.

In the next few articles, we will discuss how the Great Resignation has affected employers and how Plan Notice and other similar services can help companies handle the new pressures facing staffing and human resources.

11/19/2021

Part III - Merging Retirement Plans After M&A

As discussed in our last edition, changes in ownership can affect the company sponsored retirement plan. A large decision of the new owners is the future of the current retirement plan. The three most common outcomes are:

1. The plan is terminated
2. The plan continues
3. The plan merges with the new corporation’s retirement plan

In the past edition, we discussed plan termination and plan continuation. Here we will discuss plan mergers.

Thanks to technology, merging retirement plans can be significantly streamlined. That said, there is still a good bit of work for the new owners to ensure that the merger proceeds quickly and correctly.

As the assets move from the old plan to the new one, employees will be locked out of their plans for a short period, known as a “plan blackout”. Everything has to stop so the current recordkeeper can run a final reconciliation on the accounts, determine how many shares should be sold, and move the funds to the new recordkeeper.

During the blackout period, employees cannot take out a loan, withdraw funds, or select new investments but contributions can continue. The new owners will determine if open loans which existed before the merger may continue as is or if employees will be required to pay them back.

After the merger is completed, the blackout period will be lifted, and employees may be required to adjust their investments based on the new investment offerings.

11/16/2021

Part II - M&A: Potential Retirement Plan Outcomes

Corporate mergers and acquisitions are at their highest rates in the recent past. Any change in ownership can affect the company sponsored-retirement plan. This is our second addition of key areas that both the current and new owners should consider regarding retirement during an ownership transfer.

During a merger and acquisition, the future of the current retirement plan should be considered. The three most common outcomes are:

1. The plan is terminated
2. The plan continues
3. The plan merges with the new corporation’s retirement plan

What happens with a plan termination? One of two things generally happens – the plan is shut down and plan participants are required to move their assets to another location, or the plan continues but new contributions are disallowed, and the status of the assets are defined by an amended plan document. In both of these cases, plan participants become fully vested, participants can change their investments and can withdraw the funds when they retire.

Ted Benna, creator of the first 401k plan and the current President of the 401k Association, says employers rarely shut down retirement plans and distribute the assets to the participants. The concern is employees will get excited about a windfall of money and spend it rather than roll it over to a new plan or reinvest it in an IRA. This option defeats the benefit of retirement savings, as once the funds are spent the participant must start saving for retirement all over again.

If the decision is made to allow the plan to continue without the benefit of any new contributions, nothing has to change in how the plan functions.

If the new owners decide to continue the plan as it is currently, or only make minor amendments to the current plan, there is very little impact on the team. Employees and employers continue making contributions and there are either no or minimal changes in the plan features. If this option is decided, the new owners must review the plan documents and ensure everything moved into their name and proper methods are put in place to ensure that plan requirements are met.

In our next edition, we will discuss the third option, merging plans.
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