What an Employer Must Reveal About a 401(k)

Plan participants are entitled to extensive, detailed information

Any employer who offers a 401(k) retirement plan is required to provide each plan participant, free of charge, copies of the summary plan description, the summary annual report, and an annual statement of the participant's account. 

In addition, every participant has the legal right to request, in writing, a host of other information about the 401(k), its sponsors, and its management.

While a prospectus is not required, many 401(k) providers issue a prospectus of every fund offered in the plan. There is also a legal requirement to provide a prospectus on the employer's own stock if it is offered in its plan.

Key Takeaways

  • While a prospectus is not required, many 401(k) providers issue a prospectus of every fund offered in the plan.
  • A summary plan description is necessary for any retirement plan covered by the Employee Retirement Income Security Act.
  • The summary of benefits and coverage uses plain language to summarize key features of the plan, including benefits and coverage limitations.

Summary Plan Description

The summary plan description, or SPD, is a document that provides plan participants with "the most important facts they need to know about their retirement and health benefit plans, including plan rules, financial information, and documents on the operation and management of the plan," according to the U.S. Department of Labor (DOL).

The SPD is required for any retirement plan covered by the Employee Retirement Income Security Act (ERISA). The plan provider must disclose employee eligibility requirements, how benefits are calculated, vesting schedules, and details on how to file claims for benefits. If a 401(k) plan changes, the employer is required to provide all participants with a summary of material modifications detailing the changes and how they affect the plan. 

Summary Annual Report

Summary annual reports are filed with the DOL and include financial information about the 401(k) plan's assets. These reports are often called "5500 reports" because they are filed on government Form 5500.

Every participant has the legal right to request a host of information about the 401(k), its sponsors, and its management.

Additional Information

Plans also must provide a summary of benefits and coverage (SBC) that uses clear, plain language to summarize covered benefits, cost-sharing provisions, and coverage limitations, among other details. Plans and issuers must provide the SBC to participants and beneficiaries at certain times, including with written application materials, at renewal, upon special enrollment, and upon request.

Upon written request to the plan administrator, every employee also has the legal right to the following:

  • Another copy of the SPD, the summary annual report, or a full copy of the annual report.
  • Copies of all documents filed by the 401(k) plan with the Department of Labor, including insurance contracts, collective bargaining agreements, and plan descriptions.
  • A complete list of the employer and employee organizations sponsoring the 401(k) plan, including addresses. The plan administrator has the right to charge a reasonable amount for copies of this information.

If the employer opts to automatically enroll its employees in a 401(k) plan, the employer is further required to provide a description of the automatic enrollment process and participants' rights.

Recourse for Lack of Information

If a plan participant is unable to obtain any of the required information from the plan administrator, copies may also be obtained through written request to the Department of Labor's Employee Benefits Security Administration (EBSA). Participants are charged a "nominal copying charge" for the service if it's over 100 pages. The address is U.S. Department of Labor, EBSA Public Disclosure Facility, Room N-1515, 200 Constitution Avenue, N.W., Washington, D.C. 20210.

Participants should provide their name, address, and phone number for EBSA to follow up on the request.

The Bottom Line

Information backing up a 401(k) retirement plan changes frequently and is too important to ignore. The information is freely available if participants know what they are entitled to see and how to ask for it.

Article Sources
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  1. U.S. Department of Labor. "Meeting Your Fiduciary Responsibilities," Pages 6, 9, 10.

  2. Internal Revenue Service. "A Plan Sponsor's Responsibilities."

  3. U.S. Department of Labor. "Plan Information."

  4. U.S. Department of Labor. "Target Date Retirement Funds—Tips for ERISA Plan Fiduciaries."

  5. U.S. Department of Labor. "Final Rule to Improve Transparency of Fees and Expenses to Workers in 401(k)-Type Retirement Plans."

  6. U.S. Department of Labor. "401(k) Plans for Small Business."

  7. U.S. Department of Labor. "Ask EBSA."

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