EP Examination Process Guide - Section 9 - Participant Rights - Plan Events |
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Explanation of plan events, what notices participants should receive based upon these plan events and when these notices should be issued.
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When the Plan is Amended
When the plan is amended or when the information in the Summary Plan Description (SPD) has changed, participants should receive a Summary of Material Modifications (SMM).
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When a Plan Sponsor Submits an Application
When a plan sponsor submits an application to the IRS for determination of the qualified status of a new or amended plan or upon plan termination, participants are allowed to comment to the IRS and/or DOL regarding the plan’s qualification and must be notified of their right to comment via an Interested Party Notice.
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When Future Benefit Accruals Will Be Significantly Reduced
When future benefit accruals will be significantly reduced by a plan amendment, participants should receive a notice explaining how future accruals are expected to be reduced. The notice is generally referred to as a 204(h) Notice.
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When a Plan is to be Terminated
When a plan is to be terminated, participants must receive a written notice of the company’s intention to terminate the plan and a notice of plan benefits.
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When Funding Falls Below a Certain Level
In a defined benefit plan, when funding falls below a certain level a notice must be issued outlining the estimated under-funded amount and the Pension Benefit Guaranty Corporation coverage.
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When a Plan Administrator Makes a Mistake
When the plan administrator makes a mistake in the day-to-day administration of the plan, the participants will generally receive a letter explaining the correction made to the plan.
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When an IRC 401(k) Plan Fails the ADP/ACP Tests
When an IRC 401(k) plan fails the actual deferral percentage (ADP) test or actual contribution percentage (ACP) test, the plan administrator should issue a notice of correction letter to all affected highly compensated employees, or when applicable, a notice that a corrective distribution is being made.
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When a Plan May Impose a Blackout Period
In an individual account plan, the plan may impose a blackout period during which there can be a temporary suspension, limitation, or restriction on the ability of participants to direct or diversify assets or to obtain loans or take plan distributions. When a blackout period is imposed, participants should be formally advised about the duration and limitations of the blackout period.
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Page Last Reviewed or Updated: October 15, 2008