On December 20, 2006, the Department of Labor issued Field
Assistance Bulletin (FAB) 2006-03 providing guidance for the Employee
Benefits Security Administration’s national and regional offices concerning
good faith compliance with the pension benefit statement provisions
of section 105 of ERISA, as amended by the Pension Protection Act of
2006. In FAB 2006-03, the Department indicated, among other things,
that, pending the issuance of further guidance, the furnishing of pension
benefit statement information not later than 45 days following the end
of the relevant period (calendar quarter or calendar year) will constitute
good faith compliance with the requirement to automatically furnish
pension benefit statements by individual account plans.
Since the issuance of FAB 2006-03, it has come to the attention
of the Department that many individual account plans that do not permit
participants and beneficiaries to direct the investment of assets in
their individual accounts may not be able to comply within the 45-day
period set forth in the FAB. It is represented that many of these plans
are profit sharing plans and the sponsors of those plans do not determine
or contribute profit sharing contributions until after the sponsor’s
business tax return is completed. Similarly, non-participant directed
individual account plans sponsored by partnerships cannot make contribution
determinations until completion of the partnership tax return. It also
is represented that many such plans are dependent on securing third-party
valuations for those assets that do not have a readily ascertainable
value. Compliance with the 45-day good faith period, therefore, would
appear to be impossible or very expensive for many of these plans unless
the benefit statements were based on data from the end of the prior plan year. It is further represented that
much of the required information is compiled in connection with the
preparation of the plan’s Form 5500 Annual Return/Report and, accordingly,
the time frame for furnishing benefit statements should correspond to
the required filing of the plan’s Form 5500.
In view of the foregoing, and pending the issuance of further
guidance, the Department is providing the following additional guidance.
Plan administrators of individual account plans that do not provide
for participant direction of investments will be treated as acting in
good faith compliance with a reasonable interpretation of section 105(a)(1)(A)(ii)
of ERISA when statements are furnished to participants and beneficiaries
on or before the date on which the Form 5500 Annual Return/Report is
filed by the plan (but in no event later than the date, including extensions,
on which the Annual Return/Report is required to be filed by the plan)
for the plan year to which the statement relates.
This guidance supersedes the guidance provided in FAB 2006-03
as it relates to the dates for furnishing pension benefit statements
to participants and beneficiaries of individual account plans that do
not permit participants and beneficiaries to direct the investment of
assets in their individual accounts.
Questions concerning this matter may be directed to Jeff
Turner or Suzanne Adelman, at 202.693.8523.