QDIA and Safe Harbor Annual Notices

The Department of Labor requires a QDIA Notice be provided to participants 30 days before initial plan eligibility, or before the first investment made on behalf of an eligible participant be deposited into a QDIA. The Notice must also be provided annually, 30 days prior to the beginning of each plan year. The regulation permits employers to be shielded from liability under ERISA Section 404(c) for retirement plan investments made under a default investment arrangement, commonly used in participant directed plans to invest the accounts of participants who fail to make an election as to how they want their retirement account invested.

Participants invested in a QDIA must have the same investment transfer rights as any other plan participant:

• The plan must provide all participants with the ability to make investment transfers at least once within any three month period.
• During the first 90 days (starting with the date of the participant’s first contribution), a participant invested in the QDIA must be able to transfer to another investment, without the imposition of any restrictions, fees or expenses.

Although compliance with the QDIA regulations is voluntary, it is recommended that plan sponsors provide this Notice to eligible employees, reducing potential exposure to liability regarding investments under the Plan.

If your plan is a “Safe Harbor 401k” each employee eligible to participate in your Safe Harbor 401(k) Plan must receive a notice of the arrangement 30 days prior to the beginning of the new Plan Year. In addition, employees that become newly eligible to participate in the plan must receive a Safe Harbor notice before their eligibility date.

The notice must specifically describe the following:

• The Plan to which Safe Harbor Contributions will be made.
• The Safe Harbor Match or Non-Elective Contribution formula provided under the Plan.
• The maximum amount of compensation that may be deferred under the Plan.
• How to make or change deferral elections, including any administrative requirements.
• The periods available under the Plan for making or changing deferral elections.
• Distribution and vesting provisions applicable to contributions under the Plan.
• The name of the contact person(s) from which employees can receive further plan information.