Any employer who offers a 401(k) plan is required to provide, free of charge, each plan participant with a copy of the summary plan description, a copy of the summary annual report and an annual statement of the participant’s account. In addition, every participant has the legal right to request, in writing, a host of other information about the 401(k) plan, its sponsors and its management.
While a prospectus is not required, many 401(k) plan providers issue a prospectus of every fund offered in the plan. There is a legal requirement to provide a prospectus on the employer’s own stock if it is offered in its plan.
Summary Plan Description
The summary plan description, or SPD, is defined by the U.S. Department of Labor as a document that provides “the most important facts they need to know about their retirement and health benefit plans including plan rules, financial information, and documents on the operation and management of the plan.”
The SPD requirement is necessary for any retirement plan covered by the Employee Retirement Income Security Act (ERISA). Inside, the plan provider must disclose employee eligibility requirements, how benefits are calculated, vesting schedules and details on how to file claims for benefits. If a 401(k) plan changes, the employer is required to provide all participants with a summary of material modifications detailing the changes and how they affect the plan.
Summary Annual Report
Summary annual reports are filed with the Department of Labor and include financial information about the 401(k) plan’s assets. These reports are often called “5500 reports,” owing to the fact that they are filed on government form 5500.
Other Information
Every employee has the legal right to, upon written request to the 401(k) plan administrator, the following reports or employer information:
– Another copy of the summary plan description, the summary annual report or a full copy of the annual report in its entirety.
– Copies of all documents filed by the 401(k) plan with the Department of Labor, including insurance contracts, collective bargaining agreements and plan descriptions.
– A complete list of the employer and employee organizations sponsoring the 401(k) plan, including addresses. The plan administrator has the right to charge a reasonable amount for the copies of this information.
– If the employer opts to automatically enroll its employees into a 401(k) plan, the employer is further required to provide a description of the automatic enrollment process and the participant’s rights.
Recourse for Lack of Information
If a 401(k) plan participant is unable to obtain any of the required information from the plan administrator, copies may also be obtained through written request to the Department of Labor’s Employee Benefits Security Administration (EBSA). Participants are charged a “nominal copying charge” for the service.