The Pension Protection Act of 2006 (PPA) says that plans with participant direction of investment must provide quarterly benefit statements. These statements must include vesting information. However, the law allows the plan to provide vesting information annually in a separate statement, in accordance with the rules of the Department of Labor (DOL).

As of yet, the DOL has not formally commented on annual vesting statements. Accordingly, the March 15 SunGard Technical Update took the position that the plan, to be conservative, should provide vesting information quarterly with the rest of the benefit statement.

Since then, DOL officials have privately indicated that they believe it is a reasonable, good faith interpretation of the law for a plan to provide vesting information annually, even in the absence of specific DOL guidance. While these comments are not official, SunGard now believes it is appropriate to provide vesting information annually, and provide other benefit statement information quarterly.

This is convenient because many plan administrators have a long practice of providing participants with an annual statement of their vested benefit. These administrators should be able to continue that practice without concern that they will need to include the information on quarterly statements. There is no stated deadline for providing the annual vesting statement. In that case, current practice of providing the vesting statement around the time the employer submits form 5500 will likely be adequate.

We will be discussing this change and other rules relating to benefit statements in our June 26 Web Seminar, Participant Benefit Statements. This important presentation will look at all the rules as we now understand them, answer practitioners’ most frequently asked questions, and provide practical examples of how to proceed for the future.