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What you don't know will hurt you..... 404a-5. Why do you need a strong investment advisor as your quarterback.

Written by Peter C. Karp Level 20

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It is your fiduciary obligation to know what is applicable to your retirement plan. Your new participant disclosure obligations under Regulation §404a-5.

Under ERISA Regulation §404a-5, you, as the plan administrator, are now required to provide all 'eligible employees' with certain plan and investment-related disclosures before they direct their 401(k) investments, and annually thereafter. The term 'eligible employees' refers to participating and non-participating employees in your company, as well as beneficiaries who have the right to direct investments in the account.

Timing of "initial" §404a-5 notice - Keep these dates in mind
According to the Department of Labor (DOL), plans are required to provide the "initial" plan and investment-related disclosures no later than the later of:
 
 I. 60  days following July 1, 2012, or
 
 II. 60  days following the first day of the first plan year that begins  after November 1, 2011.
 
For most plans, i.e. those with a calendar year plan year, the "initial" disclosures must be provided to all eligible employees by August 30, 2012.

These disclosures will also need to be provided to your eligible employees on an annual basis thereafter, as determined by you, as well as to any eligible employees before they can first direct investments.

In addition, any changes made to the plan-related information already provided needs to be communicated 30 to 90 days prior to those changes coming into effect. Other information will need to be provided to plan participants and beneficiaries on a quarterly basis, including any charges deducted from participant accounts.

Tools to help you meet your disclosure requirements
While you are ultimately responsible for ensuring these §404a-5 disclosures are provided to your eligible employees, we are here to help guide you at Karp Capital.


The posted information is for informational purposes only. This message does not constitute an offer to sell or a solicitation of an offer to buy any security. All opinions and estimates constitute Karp Capital's judgment as of the date of the report and are subject to change without notice. Accordingly, no representation or warranty, expressed or otherwise, is made to, and no reliance should be placed on, the fairness, accuracy, completeness or timeliness of the information contained herein. Securities offered through Financial Telesis Inc., member SIPC/FINRA.  Financial Telesis Inc. and Karp Capital Management are not affiliated companies. 

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