401k Summary Annual Report Cover Letter Sample

Administrators of most private sector, employer-sponsored health insurance and benefit plans have a legal obligation to distribute a summary annual report to plan participants. With the exception of a daycare center, which isn’t governed by the Employee Retirement Income Security Act, this requirement extends to small businesses offering a 401(k) or SEP retirement plan or a profit-sharing plan. Compliance is mandatory, and penalties for willful noncompliance can include a fine of up to $100,000, imprisonment for up to 10 years or both.

Distributing a Summary Annual Report

A summary annual report is a condensed version of the Form 5500 report, which plan administrators must file with the Department of Labor for each ERISA-covered plan. For example, if a business offers a 401(k) retirement plan, a group health insurance plan and a dental and vision plan, it must distribute a separate summary annual report for each of these plans. In addition, distribution requirements extend to active plans as well as any plans terminated in the previous calendar year.

Distribution Time Frame

ERISA regulations state that unless a business requests and receives a two-month extension from the Internal Revenue Service, plan administrators must distribute a summary annual report by the last day of the ninth month following the end of the business’s fiscal year. This means if a business’s fiscal year ends on October 31, the report must be distributed by July 31 -- or September 30 if an extension was granted -- of the following year.

Distribution Options

A business has the option to distribute a summary annual report using any measure “reasonably calculated to ensure actual receipt of the material,” including personally, via postal mail or electronically. There are, however, guidelines that must be followed if the business opts for electronic delivery. The plan administrator must provide advance notice the summary annual report will be sent electronically and offer the recipient a free paper copy. If the summary annual report is sent via email, the recipient must be able to access it at the work site and print it free of charge. In addition, the plan administrator must ensure the recipient actually receives the summary annual report, such as by including a return-receipt request.

Content Variations

The content in a summary annual report will vary according to the information in its corresponding Form 5500 health or benefit plan annual report. Regardless, however, each has a specific format the summary annual report must follow and specific financial information each must include. For example, a summary annual report for a retirement plan must include a basic financial statement identifying plan expenses, the value of the plan’s assets, an actuary statement as to whether enough money was contributed to the plan to keep it funded in accordance with the minimum funding standards of ERISA and a section outlining a participant’s rights to additional information.

About the Author

Based in Green Bay, Wisc., Jackie Lohrey has been writing professionally since 2009. In addition to writing web content and training manuals for small business clients and nonprofit organizations, including ERA Realtors and the Bay Area Humane Society, Lohrey also works as a finance data analyst for a global business outsourcing company.

Photo Credits

  • Photodisc/Photodisc/Getty Images

Suggest an Article Correction

§ 2520.104b-10 Summary Annual Report.

(a)Obligation to furnish. Except as otherwise provided in paragraph (g) of this section, the administrator of any employee benefit plan shall furnish annually to each participant of such plan and to each beneficiary receiving benefits under such plan (other than beneficiaries under a welfare plan) a summary annual report conforming to the requirements of this section. Such furnishing of the summary annual report shall take place in accordance with the requirements of § 2520.104b-1 of this part.

(b) [Reserved]

(c)When to furnish. Except as otherwise provided in this paragraph (c), the summary annual report required by paragraph (a) of this section shall be furnished within nine months after the close of the plan year.

(1) In the case of a welfare plan described in § 2520.104-43 of this part, such furnishing shall take place within 9 months after the close of the fiscal year of the trust or other entity which files the annual report under § 2520.104a-6 of this part.

(2) When an extension of time in which to file an annual report has been granted by the Internal Revenue Service, such furnishing shall take place within 2 months after the close of the period for which the extension was granted.

(d)Contents, style and format. Except as otherwise provided in this paragraph (d), the summary annual report furnished to participants and beneficiaries of an employee pension benefit plan pursuant to this section shall consist of a completed copy of the form prescribed in paragraph (d)(3) of this section, and the summary annual report furnished to participants and beneficiaries of an employee welfare benefit plan pursuant to this section shall consist of a completed copy of the form prescribed in paragraph (d)(4) of this section. The information used to complete the form shall be based upon information contained in the most recent annual report of the plan which is required to be filed in accordance with section 104(a)(1) of the Act.

(1) Any portion of the forms set forth in this paragraph (d) which is not applicable to the plan to which the summary annual report relates, or which would require information which is not required to be reported on the annual report of that plan, may be omitted.

(2) Where the plan administrator determines that additional explanation of any information furnished pursuant to this paragraph (d) is necessary to fairly summarize the annual report, such explanation shall be set forth following the completed form required by this paragraph (d) and shall be headed, “Additional Explanation.”

(3)Form for Summary Annual Report Relating to Pension Plans.

(4)Form for Summary Annual Report Relating to Welfare Plans.

(e)Foreign languages. In the case of either -

(1) A plan which covers fewer than 100 participants at the beginning of a plan year in which 25 percent or more of all plan participants are literate only in the same non-English language; or

(2) A plan which covers 100 or more participants in which 500 or more participants or 10 percent or more of all plan participants, whichever is less, are literate only in the same non-English language -

The plan administrator for such plan shall provide these participants with an English-language summary annual report which prominently displays a notice, in the non-English language common to these participants, offering them assistance. The assistance provided need not involve written materials, but shall be given in the non-English language common to these participants. The notice offering assistance shall clearly set forth any procedures participants must follow to obtain such assistance.

(f)Furnishing of additional documents to participants and beneficiaries. A plan administrator shall promptly comply with any request by a participant or beneficiary for additional documents made in accordance with the procedures or rights described in paragraph (d) of this section.

(g)Exemptions. Notwithstanding the provisions of this section, a summary annual report is not required to be furnished with respect to the following:

(1) A totally unfunded welfare plan described in 29 CFR 2520.104-44(b)(1)(i);

(2) A welfare plan which meets the requirements of 29 CFR 2520.104-20(b);

(3) An apprenticeship or other training plan which meets the requirements of 29 CFR 2520.104-22;

(4) A pension plan for selected employees which meets the requirements of 29 CFR 2520.104-23;

(5) A welfare plan for selected employees which meets the requirements of 29 CFR 2520.104-24;

(6) A day care center referred to in 29 CFR 2520.104-25;

(7) A dues financed welfare plan which meets the requirements of 29 CFR 2520.104-26;

(8) A dues financed pension plan which meets the requirements of 29 CFR 2520.104-27; and

(9) A plan to which title IV of the Act applies.

Appendix to § 2520.104b-10 - The Summary Annual Report (SAR) Under ERISA: A Cross-Reference to the Annual Report

SAR item Form 5500 large plan filer line items Form 5500 small plan filer line items Form 5500-SF filer line items
A. PENSION PLAN:
1. Funding arrangementForm 5500-9aSameNot applicable.
2. Total plan expensesSch. H-2jSch. I-2jLine 8h.
3. Administrative expensesSch. H-2i(5)Sch. I-2hLine 8f.
4. Benefits paidSch. H-2e(4)Sch. I-2eLine 8d.
5. Other expensesSch. H-Subtract the sum of 2e(4) & 2i(5) from 2jSch. I-2iLine 8g.
6. Total participantsForm 5500-6fSameLine 5b.
7. Value of plan assets (net):Sch. H-1l [Col. (b)]Sch. I-1c [Col. (b)]Line 7c [Col. (b)].
a. End of plan year
b. Beginning of plan yearSch. H-1l [Col. (a)]Sch. I-1c [Col. (a)]Line 7c [Col. (a)].
8. Change in net assetsSch. H-Subtract 1l [Col. (a)] from 1l [Col. (b)]Sch. I-Subtract 1c [Col. (a) from Col. (b)]Line 7c-Subtract Col. (a) from Col. (b).
9. Total incomeSch. H-2dSch. I-2dLine 8c.
a. Employer contributionsSch. H-2a(1)(A) & 2a(2) if applicableSch. I-2a(1) & 2b if applicableLine 8a(1) if applicable.
b. Employee contributionsSch. H-2a(1)(B) & 2a(2) if applicableSch. I-2a(2) & 2b if applicableLine 8a(2) & 8a(3) if applicable.
c. Gains (losses) from sale of assetsSch. H-2b(4)(C)Not applicableNot applicable.
d. Earnings from investmentsSch. H-Subtract the sum of 2a(3), 2b(4)(C) and 2c from 2dSch. I-2cLine 8b.
10. Total insurance premiumsTotal of all Schs. A-6bTotal of all Schs. A-6bNot applicable.
11. Unpaid minimum required contribution (S-E plans) or Funding deficiency (ME plans):Sch. SB-39SameSame.
a. S-E Defined benefit plans
b. ME Defined benefit plansSch. MB-10SameNot applicable.
c. Defined contribution plansSch. R-6c, if more than zeroSameLine 12d.
B. WELFARE PLAN
1. Name of insurance carrierAll Schs. A-1(a)SameNot applicable.
2. Total (experience rated and non-experienced rated) insurance premiumsAll Schs. A-Sum of 9a(1) and 10aSameNot applicable.
3. Experience rated premiumsAll Schs. A-9a(1)SameNot applicable.
4. Experience rated claimsAll Schs. A-9b(4)SameNot applicable.
5. Value of plan assets (net):Sch. H-1l [Col. (b)]Sch. I-1c [Col. (b)]Line 7c [Col. (b)].
a. End of plan year
b. Beginning of plan yearSch. H-1l [Col. (a)]Sch. I-1c [Col. (a)]Line 7c [Col. (a)].
6. Change in net assetsSch. H-Subtract 1l [Col. (a)] from 1l [Col. (b)]Sch. I-Subtract 1c [Col. (a)] from 1c [Col. (b)]Line 7c-Subtract [Col. (a)] from 7c [Col. (b)].
7. Total incomeSch. H-2dSch. I-2dLine 8c
a. Employer contributionsSch. H-2a(1)(A) & 2a(2) if applicableSch. I-2a(1) & 2b if applicableLine 8a(1) if applicable.
b. Employee contributionsSch. H-2a(1)(B) & 2a(2) if applicableSch. I-2a(2) & 2b if applicableLine 8a(2) if applicable.
c. Gains (losses) from sale of assetsSch. H-2b(4)(C)Not applicableNot applicable.
d. Earnings from investmentsSch. H-Subtract the sum of 2a(3), 2b(4)(C) and 2c from 2dSch. I-2cLine 8b.
8. Total plan expensesSch. H-2jSch. I-2jLine 8h.
9. Administrative expensesSch. H-2i(5)Sch. I-2hLine 8f.
10. Benefits paidSch. H-2e(4)Sch. I-2eLine 8d.
11. Other expensesSch. H-Subtract the sum of 2e(4) & 2i(5) from 2jSch. I-2iLine 8g.

[ 44 FR 19403, Apr. 3, 1979, as amended at 44 FR 31640, June 1, 1979; 47 FR 31873, July 23, 1982; 54 FR 8629, Mar. 1, 1989; 65 FR 21085, Apr. 19, 2000; 65 FR 35568, June 5, 2000; 68 FR 16400, Apr. 3, 2003; 72 FR 64729, Nov. 16, 2007; 80 FR 5663, Feb. 2, 2015]

0 comments

Leave a Reply

Your email address will not be published. Required fields are marked *