Do you understand 401(k) participant notice requirements?

Photo in an office of a group of employees who have received their 401k notices at the correct times.

If you manage a retirement plan, you probably manage participant notices. And there are a handful—eligibility notices when it’s time for employees to get started in the plan, annual notices that explain fees and plan provisions, and situational notices if you make certain changes.

Do you know the rules around timing and delivery? It’s time to find out.

Retirement plan notice requirements

Whether you use traditional or automatic enrollment with immediate or delayed eligibility, you’re required to provide notices before eligibility or a participant’s first contribution.

You need to provide other notices annually. Examples include 404(a) participant fee disclosure as well as notices based on plan features like automatic enrollment, qualified default investment alternative (QDIA), and safe harbor.

Notices for new plans, plan transitions, and plan changes, including investment and expense changes, typically need to be distributed at least 30 days before the effective date(s).

There’s variation in timing and who needs to receive each notice, so it’s important to check the details.

Electronic delivery of retirement plan notices

Sending retirement plan notices by email may help simplify the disclosure process, provide more reliable delivery and reduce plan administration costs. But before you distribute required plan notices such as eligibility notices by email, you need to make sure your employees are “wired at work.” In general, that means they need to have access to the electronic notices at work. They should use a work computer and your organization’s email system as a part of their job.

What if your employees aren’t “wired a work”? You can still use electronic delivery for annual and plan change notices if they’ve given consent for electronic delivery. The plan’s service provider may allow participants to select electronic delivery during online account setup or elsewhere on its website.

Keep in mind, it’s not all or nothing. You can use electronic delivery for some employees and paper delivery for others.

3 steps for simpler participant notice delivery

There are 3 things you can do to improve participant notice delivery for your organization’s defined contribution retirement plan.  

1. Review this retirement plan participant notice summary (PDF) to make sure you know which notices to send and the timing requirements.

2. Review this guide to electronic notice delivery (PDF) to understand if electronic delivery will work for some or all your employees.

3. Find out how your retirement plan service provider can help. For example, Principal® can distribute transition, eligibility, annual and other notices to employees who are “wired at work” and those who’ve consented to electronic delivery. We can also let plan sponsors know when it’s time to deliver notices to those who aren’t “wired at work” or haven’t consented to electronic delivery. Our notification system is designed to help you notify the right people at the right time. That’s standard, and there’s no additional cost. We can also mail paper notices for a fee.

For more information on participant notices, talk with your financial professional or third party administer if you work with one. Or give us a call. We want to help.

The subject matter in this communication is educational only and provided with the understanding that Principal® is not rendering legal, accounting, investment advice or tax advice. You should consult with appropriate counsel or other advisors on all matters pertaining to legal, tax, investment or accounting obligations and requirements.

Insurance products and plan administrative services provided through Principal Life Insurance Co., a member of the Principal Financial Group®, Des Moines, Iowa 50392.

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