Will the SAR Be Terminated?

[Part I posted in October: EBSA’s Debate on the Fate for the SAR, SPD and Annual Notices | Part 1]

Could 2018 bring change for ERISA mandated disclosures such as the SAR? Yes, if the EBSA Advisory Council recommendations to the heads of the DOL are implemented. This would impact the

• The Summary Annual Report (SAR),
• The numerous annual and event-based notices
• The Summary Plan Description (SPD)

Key recommendations:

1. Create an annual SPD quick reference guide (model to be provided) that would accompany the SBC and encompass the key “need to know” details of the Plan.

The guide would be a simple introductory section of the SPD, delivered automatically on an annual basis. It would cover all mandated information with references to find further details such as:

• Highlighting any changes that have occurred since the last distribution

2. If the guide was distributed, then the following would not be needed:

a. Issuing out the SPD every five or ten years as applicable
b. An annual SAR
c. A Summary of Material Modifications (SMM)
d. Any annual notices not triggered by an event

3. Explore the usage and effectiveness of electronic distribution of various materials to potentially reduce burden of Plan Sponsors and help participants.

Truly No SAR?

Correct – based on the Recommendation. The Advisory Council advocates for the Plan Administrator to inform participants that the annual report is available for review in a separate notice or incorporate in a document where all of the annual notices would be consolidated into one notice and be issued on the earliest required notice or during open enrollment period.

Will the Recommendations be Implemented?

Per a DOL representative, the next step is for the DOL to review the reports and determine what, if any, action it plans to take.  Although there are no guarantees, there is always the likelihood as the DOL has acted on the Council’s recommendations in the past. However, they do not keep to a timeframe.

Has the DOL implemented Council’s Advice?

Yes, in 2013 the Council advised to implement a missing participant program for terminated defined-contribution, then compliance with the PBGC program would be accorded safe harbor status under ERISA that would be in cooperation with all agencies (DOL, IRS, etc.). The program was issued in September, 2016.

Recommendations are Based on These Findings:

SAR:

Three Key Findings:

1. The SAR does not achieve the intended purpose
2. The SAR does not include sufficient information to allow oversight
3. Participants receive stale information due to timing

Annual Notices:

One Key Finding

1. There are 20+required health notices that are often ignored

SPD:

Three Key Findings:

1. Health Plan SPDs are no longer summaries
2. Distribution is burdensome and expensive
3. Participants often obtain critical information elsewhere

Electronic Distribution

Key Findings:

1. Many witnesses expressed the need for permitted e-disclosure to enhance effectiveness, reduce burden and provide flexibility
2. Would help to be more timely updates, lower distribution costs and administrative burden
3. Could be a means to collect data and analyzing user’s utilization.

For More Information:

For copies of the report of the recommendations as well as copies of transcripts of the EBSA’s Advisory meetings, feel free to contact Ann McAdam at Wrangle: amcadam@wrangle5500.com.