Instead of sending out an article this month we are sending out to our 401(k) participants the QDIA notice, Summary Plan Description, Summary of Material Modifications (SMM), Summary Annual Report (SAR), and where applicable a Match notice. For those with a Plan year ending on December 31st, these notifications should be landing in your inbox or mailbox by Dec. 1st. In this short letter we would like to give you a brief description of what each of these notices are.
Qualified Default Investment Alternative. The Plan Sponsor is required to invest money in a participant’s account in which the participant does not select an investment option. The notice describes the investment option that the Plan Sponsor has designated as the QDIA.
As the name says, a Summary Plan Description is a summary of the key features of your 401(k) Plan. This report is made available to you at the time of enrollment. It is suggested that everyone receive this report every few years or if a major change has happened in the plan.
A Summary of Material Modifications is required to be sent out when there has been a material change in the plan or when information provided in the SPD has changed. This summary must also be written in a manner to be understood by the average participant.
The Summary Annual Report is an annual report summarizing the retirement plan’s financial activities as reported on the Form 5500 filed with the Internal Revenue Service (IRS).
Safe Harbor Match Notice
This notice contains the information pertaining to the company match. This is only required if the Plan has a Safe Harbor Match. If the Plan does not have a Safe Harbor Match, the Plan is not required to send out a match notice.
We hope that you will take the time to look at your notices as they arrive.
Have a wonderful time with friends and family this Thanksgiving!!!