The Department of Labor (DOL) issued guidance earlier this month that will affect defined benefit plans’ annual funding notices. The annual funding notice requirements were amended by SECURE 2.0 and are effective for plan years beginning after December 31, 2023. The changes made by the Act, and the guidance issued by the DOL, are intended to more clearly identify a plan’s funding issues for the recipients of the notice. Notices are generally due 120 days after the plan year, meaning that the first deadline subject to the new requirements is April 30, 2025 for a calendar year end plan.
The DOL issued Q&As and model notices for both single employer and multiemployer pension plans. Plan administrators are not required to use the model notices but should be cautious in dramatically diverging from the model notice. The DOL acknowledged that the bulletin does not address all SECURE 2.0-related issues that may arise with respect to annual funding notices but provides that the model notices may be used and will be treated as a good faith interpretation of the SECURE 2.0 guidance. Further, the Q&As are clear that the prior model notices (that were previously issued in the DOL regulations) may not be relied on for notice years beginning after December 31, 2023.
The timing of the DOL guidance is not ideal for calendar year end plan sponsors. The DOL Bulletin was issued on April 3rd and acknowledges that some plans may have already prepared the 2024 notice with the upcoming April 30th deadline. But plan administrators should expect no leniency given the proximity. The guidance provides that the DOL expects plan administrators to consider the issued guidance in determining whether the disclosure requirements, as amended by SECURE 2.0, have been satisfied and to take appropriate corrective action as necessary.
Please note that several of the notice requirements are different for “small plans” (generally plans with 100 or fewer participants on each day during the plan year preceding the notice), including the notice deadline, which potentially may be provided as late as 9 ½ months following the plan year end.
If you have any questions on your plan’s annual funding notice, or any other change in administration caused by SECURE 2.0, please feel free to contact any of the members of our employee benefits team.
