A Spring Opening for 'Window' Participant Notice?

By Craig Hoffman • January 12, 2015 • 0 Comments
A regulation that would allow for a “window” period for giving out the annual notice required in most 401(k) plans appears to be heading for a spring 2015 publication date — and that could be good news for your plan sponsor clients.

A new addition to the November 2014 DOL guidance plan was a project with the mind-numbing name, “Fiduciary Requirements for Disclosure in Participant-Directed Individual Accounts Plans — Timing of Annual Disclosure.” This regulatory project relates to the deadline for providing the annual notice that must be given at least once in every 12-month period following the initial distribution of the comparative chart of investments and other information. It must be given to participants in defined contribution plans with directed investments, like 401(k)s.

In Field Assistance Bulletin (FAB) 2013-02, the DOL indicated that it was considering providing a 30- to 45-day “window” period for supplying the annual update to the initial notice. The FAB acknowledged that plan administrators and service providers had expressed concern that the regulations had effectively created an annual August deadline that didn’t match up with the timing of any other annual participant disclosures. This would require the annual update to be distributed by itself, at additional cost, and with a resulting greater likelihood that it would be overlooked by participants and beneficiaries.

On Jan. 9, the “window” period regulation was submitted to the Office of Management and Budget (OMB) for its review and approval. The OMB submission was made to comply with an Executive Order first issued during the Clinton administration that generally requires all federal agencies to submit their guidance projects to OMB for review. This review allows the White House to coordinate all federal rulemaking. It typically takes OMB approximately 90 days to complete the process. As a consequence, the “window period” regulation can be expected to be released sometime in April.

Interestingly, the guidance is listed as a “direct final regulation” on the OMB website. This typically means that there will be no comment period after publication because the subject matter is deemed to be non-controversial. The net result is that it is likely to become effective very soon after its publication.

ASPPA has previously filed several comment letters recommending adoption of this “window” period approach. The imminent release of the actual guidance is very good news. Once effective, it should make it much easier to comply with the mandate to distribute the notice each year. Stay tuned for the details once the regulation is actually published.

Craig P. Hoffman, APM, is ASPPA’s General Counsel and Director of Regulatory Affairs.