Informing the Government and Participants, a Fiduciary Duty of 401k Prevailing Wage Contractors
Responsibilities of Employers as Fiduciary
401k retirement plan administrators are required by ERISA to provide plan information to prevailing wage workers and beneficiaries. These will be submitted to several government agencies. The documents listed below should be given.
401k Summary Plan description (SPD)
This should be a descriptive document. It is a comprehensive, yet easy to understand explanation of the retirement plan that will enlighten the prevailing wage workers of their responsibilities and rights under a 401k plan. It also has information on the following:
- When and how the prevailing wage worker becomes qualified to participate
- Where the contributions and contribution levels come from
- The required length of time that a prevailing wage worker must be a member of a plan in order to receive benefits – this is also known as the vesting period
- The process of claiming benefits
- The prevailing wage worker’s rights and duties according to ERISA
The SPD is provided to the prevailing wage contractor or worker once they join a 401k plan. It also given to beneficiaries once they receive benefits.
401k Summary Material Modification (SMM)
This document summarizes the changes in a retirement plan or the details that are needed to be in the SPD. The SMM or the latest SPD must be given automatically to the prevailing wage worker within 210 days after the change has been implemented.
Individual Benefit Statement (IBS) of 401k retirement plans
This document gives information on vested benefits and account balances. It is submitted every quarter for those who have participant-directed accounts. Those who don’t give for participant direction submit it every year. Traditionally defined retirement plans must submit every 3 years.
Automatic enrollment notice for prevailing wage workers
This document specifies the retirement plan’s automatic enrollment procedure and rights of the participant. It should include details like the deferral percentage, default investment of the 401k plan, and the prevailing wage worker’s right to change the deferral percentage or decline from making automatic contributions. The notice must be received by the prevailing wage worker at least 30 days before he becomes qualified to participate in the plan.
401k Plan Summary Annual Report (SAR)
This report is a narrative of the financial aspect of the retirement plan’s Annual Report or the Form 5500. It is given every year. Traditionally defined retirement plans are not required to produce an SAR.
- 401k Plan Blackout period notice
Once a profit sharing or 401k plan is closed from transactions, a blackout period notice is released at a minimum of 30 days in advance. During this time, a prevailing wage worker cannot make direct investments, loans, or ask for distributions. The blackout period happens when retirement plans make changes such as replacement of record keepers, choices for investments, or increase in participants.
- Form 5500 Annual Report
The plan administrators of prevailing wage contractors are mandated to submit this document to the Federal Government. It contains information regarding the retirement plan of prevailing wage workers and how it operates. The requirements for each report may vary depending on the type and number of prevailing wage workers that are covered by the retirement plan. The process is done electronically using the ERISA Filing Acceptance System.
ARCHER JORDAN will help you Comply with Documentary Requirements of 401k Retirement Plans
Prevailing wage contractors who fail to submit the needed reports may be subjected to penalties as dictated by the Department of Labor. Avoid the inconvenience of penalties by knowing what documents to file and when to do it with ARCHER JORDAN. Give us a call. Our team is eager to help you out.