Compliance Continuity is designed to help your organization sustain the total wellbeing and engagement of your workforce, pursue your business goals, and help you achieve better results by providing ongoing benefits and HR compliance guidance, key considerations, and action steps.

While your best is finite, your better is never finished. In addition to governance requirements, retirement benefit plans are subject to a number of laws requiring that certain information be documented and that certain information be provided to plan participants (called disclosure). The volume and timing of these requirements can keep employers scrambling. Follow the action steps below to help you proactively plan a path toward better plan governance and disclosure compliance.

  1. Inventory. Notify. Comply. According to the Bureau of Labor Statistics, typically in any year, only half of workers participate in a retirement plan at work.1 The use of auto-enrollment leads to higher long-term participant rates, significantly improving employees' retirement savings. Establishing automatic retirement plan enrollment into qualified default investment alternative (QDIA) funds provides safe harbor protections for potential personal liability of plan fiduciaries while improving the ability of participants to build toward retirement benefits. However, the use of auto-enrollment triggers specific notification dates. To comply with ERISA Section 404(c), employers must inform plan participants about their investments each plan year. The notices for a Safe Harbor Plan, Auto Enrollment, and QDIA notices must be distributed at least 30 days (and no more than 90 days) before the beginning of each plan year. In other words, the notices that apply to your plan must be distributed no later than December 1, 2019 for calendar year plans. What notices must you provide for your retirement plan before the end of this year?
  2. Verify. Prepare. Report. 2019 saw increasing headline coverage of retirement plan litigation. In one lawsuit, Ramon Diaz et al v. BTG International Inc., a plan with roughly 800 participants and $63 million in plan assets alleges that plan fiduciaries committed a fiduciary breach by negligently preparing and/or intentionally misstating Forms 5500. The plaintiffs in that case claim that the plan fiduciaries filed Forms 5500 for several years, indicating that the third-party service provider received no compensation while the service provider was actually engaged in revenue sharing, which was not disclosed on the Forms 5500. Plan fiduciaries are required to correctly report compensation to third-party service providers. How does your organization ensure that your fee disclosures are accurately stated in your Forms 5500?
  3. File. Summarize. Distribute. The Summary Annual Report (SAR) summarizes the information contained in the most recently filed Form 5500 and must be distributed to plan participants and beneficiaries. The SAR must be distributed within TWO months after a plan's Form 5500 return deadline. For example, for calendar year plans with a Form 5500 filing deadline of July 31, 2019, the SAR must be distributed by October 31, 2019. If that plan obtains an extension to file its Form 5500 (to October 15), then the SAR must be distributed by December 15. The SAR must be distributed to the following individuals: (1) employees who are participants in the plan; (2) participants who have terminated employment with a vested benefit; and (3) persons receiving benefits paid directly from the plan assets. What processes does your organization have in place to guarantee that SARs are timely and correctly delivered?
  4. Amend. Describe. Provide. A Summary Plan Description (SPD) describes the provisions of your retirement plan as well as the participants' rights under the plan, and a Summary of Material Modification (SMM) describes any changes to the SPD. If your plan was recently amended, your vendor should have provided an SMM for distribution with the SPD. The SPD and SMM must be furnished to all newly eligible members no later than 90 days after a member becomes eligible for the plan. For example, if you have members who become eligible for your plan on October 1, 2019, you need to provide them with the SPD and SMM by December 30, 2019. In addition, specific time requirements apply to when SPDs and SMMs must be distributed after changes are made to plan terms. What measures does your plan take to verify that it meets applicable SPD and SMM notice requirements?
  5. Monitor. Document. Disclose. The Department of Labor (DOL) mandates that employers offer at least three investment options to employees for minimum diversification, but most organizations offer far more. More than 22% of employers offer 11 to 15 investment options in their retirement plans, and 20% of employers offer 25 or more, according to Gallagher's 2018 Retirement Pulse Survey. Plan administrators of participant-directed individual account plans must disclose detailed investment-related information to plan participants and beneficiaries about the plan's designated investment alternatives. A comparative chart of the investment alternatives is prepared by the vendor provider/recordkeeper and must be distributed at least annually (defined as at least once in any 12-month period). Therefore, the timing of the distribution in one plan year will dictate the latest date on which the disclosure must be made in the following calendar year. How often are you formally reviewing and documenting the selection and ongoing evaluation of investment options in your retirement plan?

This is a preview of Compliance Continuity. For five more considerations for better retirement plan governance, contact your Gallagher representative or the subscribe button and receive the full version of Compliance Continuity monthly.

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Compliance is a series of actions, not a final destination. As a trusted advisor, Gallagher has developed this Compliance Continuity series to help you pursue a path through employee benefits compliance issues as part of an overall continuing compliance plan. Employers should carefully evaluate their health and welfare plans to determine if they are in compliance with both federal and state law. If you have any questions about one or more of the compliance destinations listed above, or would like additional information on how Gallagher constantly monitors laws and regulations impacting employee benefits in order to support employers in their compliance efforts, please contact your Gallagher representative.


1 U.S. Department of Labor, Bureau of Labor Statistics, "National Compensation Survey: Employee Benefits in the United States, March 2018."

This material was created to provide accurate and reliable information on the subjects covered, but should not be regarded as a complete analysis of these subjects. It is not intended to provide specific legal, tax or other professional advice. The services of an appropriate professional should be sought regarding your individual situation.

Gallagher Benefit Services, Inc., a subsidiary of Arthur J. Gallagher & Co., (Gallagher) is a non-investment firm that provides employee benefit and retirement plan consulting services to employers. Securities may be offered through Kestra Investment Services, LLC, (Kestra IS), member FINRA/SIPC. Investment advisory services may be offered through Kestra Advisory Services, LLC (Kestra AS), an affiliate of Kestra IS. Certain appropriately licensed individuals of Gallagher are registered to offer securities through Kestra IS or investment advisory services through Kestra AS. Neither Kestra IS nor Kestra AS are affiliated with Gallagher. Neither Kestra IS, Kestra AS, Gallagher, their affiliates nor representatives provide accounting, legal or tax advice.