United States: Department Of Labor Issues Final Regulations On Annual Funding Notices

The Employee Benefits Security Administration of the Department of Labor (hereinafter, the "DOL") recently released final regulations related to the provision of annual funding notices under Section 101(f) of ERISA. The regulations finalize the proposed regulations on annual funding notices but do not address some of the additional intervening guidance on annual funding notices released after the proposed regulations and before these final regulations.


Prior to the passage of the Pension Protection Act of 2006 ("PPA") multiemployer defined benefit pension plans had a requirement to provide an annual funding notice to participants. When the PPA was passed, it contained provisions that changed the funding notice requirements for defined benefit pension plans. The biggest change of the PPA was to extend the requirement to provide such notices to most single employer defined benefit plans. The PPA also impacted the annual funding notice content and timing. These changes were to apply for plan years beginning on or after January 1, 2008.

In 2009, the Department of Labor ("DOL") set forth some guidance for employers related to the funding notice obligations. Field Assistance Bulletin 2009-01 (the "2009 FAB") provided certain information for employers to follow and allowed a "good faith" reasonable standard for annual funding notice requirements not addressed.

In 2010, the DOL issued proposed regulations that incorporated many of the requirements found in the 2009 FAB. Employers could follow either the proposed regulations or the FAB guidance until final regulations became effective.

The annual funding notice rules were amended again in 2012 as part of the Moving Ahead for Progress in the 21st Century Act ("MAP-21"). The MAP-21 requirements were further revised in 2014 as part of the Highway and Transportation Funding Act of 2014 ("HAFTA"). The DOL provided guidance on these changes in Field Assistance Bulletin 2015 01. Many of these funding notice provisions were not permanent changes.\

In addition to these changes, in 2014 revisions were made with respect to annual funding notice requirements for multiemployer plans as part of the Multiemployer Pension Reform Act of 2014 ("MPRA").

As can be seen, since the PPA was enacted in 2006 extending the requirement to provide annual funding notices to more plans, there has been a lot of change and guidance on the proper way to provide the required information. To that end, the DOL recently issued final regulations related to the provision of annual funding notices. For the most part these final regulations track the requirements contained in the 2010 proposed regulations. Interestingly, the final regulations do not address much of the guidance related to annual funding notices that came after the proposed regulations. The DOL explains this by providing that much of the intervening information is temporary and it appears that the DOL wanted model notices and regulations that will not require changes as the temporary information expires.

Final Regulations

On February 2, 2015, the DOL released the final regulations related to the annual funding notice requirements. The final regulations are effective March 4, 2015 and apply to plan years beginning on or after January 1, 2015.

The final regulations also provide two model notices – one for single employer plans and another for multiemployer plans – to help plan administrators comply with the requirements. While use of these models is not required, if a plan administrator chooses to use the applicable model it will be deemed to satisfy the content and notice requirements of the final regulations.

The final regulations are similar to the proposed regulations and require the plan administrator of a defined benefit pension plan that is insured by the PBGC to provide a funding notice each year to (i) participants or beneficiaries, (ii) labor unions representing participants or beneficiaries, (iii) employers contributing to a multiemployer plan and (iv) the PBGC. The notice must be furnished by the 120th day following the end of the year for a large plan and by the due date (with extensions) for a small plan's Form 5500. Thus, for a large employer calendar year plan the first notice under these final regulations will be required to be provided by the end of April 2016.

An annual funding notice must include, among other things, the plan's funding percentage, a statement of the value of the plan's assets and liabilities that determine the funding percentage, the fair market value of the plan's assets on the last day of the plan year, the plan's funding and investment policies (generally) and allocation of assets, and known events that are projected to have a material effect on the plan's funding. The notice must contain identifying information about the plan (name and plan number) and each plan sponsor (name and employer identification number) and the name address and phone number of the plan administrator. If there is a different principle administrative officer from the plan administrator then his or her name address and phone number must also be provided. The notice is supposed to be written in a style and format consistent with the requirements for summary plan descriptions. This means that it should be drafted in a manner that can be understood by the average plan participant and does not mislead or misinform those reading it.

The final rules clarify that in rare circumstances (perhaps because of a good faith error or change in actuarial assumptions) if there is a change in the assets and liabilities disclosed after the notice is furnished to participants and before the filing of the Form 5500 for that year, the plan administrator is not required to restate the notice for the year. However, the DOL further provides if the change in data between the two is substantial, the administrator may want to explain it in the next plan year's funding notice.

The biggest changes from the proposed regulations on annual funding notices include exempting certain terminating single-employer plans from furnishing their funding notices; establishing alternative methods of compliance for multiemployer pension plans that have terminated by mass withdrawal and for plans described in section Code Section 412(e)(3); and including a rule of administrative convenience that if an otherwise disclosable material event first becomes known to the plan administrator 120 days or less before the due date of the funding notice, the event is not required to be disclosed in the notice.


In sum, the final rules are quite similar to the proposed rules with a bit more flexibility for certain plans. Having these final rules is helpful for those plan administrators needing to provide annual funding statements for defined benefit plans. In particular, the fact that there are model notices will permit these plan administrators to be confident that they are complying with the requirements of the final regulations.

Previously published in Employee Benefit Review - April 2015

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

In association with
Related Topics
Related Articles
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions