Notices for Active and Non-Active Participants
Today we will be discussing the intricacies of retirement plan communications and why they matter to both active and non-active participants.
To start, let's define who is considered an active participant and a non-active participant. An active participant is someone still employed by the company, regularly setting aside a portion of their paycheck into the retirement plan. On the other hand, a non-active participant might be eligible but has chosen not to contribute currently. Some have never contributed, while others might have in the past.
Both active and non-active participants receive crucial notices that explain how the retirement plan operates, the benefits they can avail, and any procedural changes. These include the Summary Annual Report, Summary Plan Description, the Qualified Default Investment Account notice, and potentially the Safe Harbor notice. Furthermore, if there are any changes to the plan, like amendments or modifications in the fund, both groups should be informed.
Apart from these essential notices, non-active participants might receive additional reminders about their eligibility and the advantages of contributing. Sending these has two primary benefits.
Firstly, it encourages the employee to utilize the company's benefits, increasing the chances they'll stay with the company. Secondly, for compliance, it's important that the company has accurate contact details for everyone, including non-active participants. Often, those not contributing might neglect updating their contact information, which can lead to compliance issues with the Department of Labor.
In summary, clear communication with both active and non-active participants is crucial for ensuring benefits are utilized and for staying compliant.
For more information on how to best communicate with both active and non-active participants, contact us today.