Requirements For Periodic Statements For Defined ...



Requirements For Periodic Statements For Defined Contribution Plans

The administrator of a defined contribution plan is required to provide a benefit statement:

(1) to a participant or beneficiary who has the right to direct the investment of the assets in his or her account, at least quarterly,

(2) to any other participant or other beneficiary who has his or her own account under the plan, at least annually, and

(3) to other beneficiaries, upon written request, but limited to one request during any 12-month period.

A benefit statement provided with respect to a defined contribution plan must include the value of each investment to which assets in the individual’s account are allocated (determined as of the plan’s most recent valuation date), including the value of any assets held in the form of employer securities (without regard to whether the securities were contributed by the employer or acquired at the direction of the individual).

A quarterly benefit statement provided to a participant or beneficiary who has the right to direct investments must also provide:

(1) an explanation of any limitations or restrictions on any right of the individual to direct an investment;

(2) an explanation, written in a manner calculated to be understood by the average plan participant, of the importance, for the long-term retirement security of participants and beneficiaries, of a well-balanced and diversified investment portfolio, including a statement of the risk that holding more than 20 percent of a portfolio in the security of one entity (such as employer securities) may not be adequately diversified; and

(3) a notice directing the participant or beneficiary to the Internet website of the Department of Labor for sources of information on individual investing and diversification.

FROM: Staff Summary pg. 122. (H.R.4 Sec. 508)

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