Clarification – SARs for Defined Benefit Plans
For the past year or so I have been writing articles -- and making comments - that, beginning with 2008 plan years, defined benefit plans no longer distribute Summary Annual Reports (SARs) but rather an Annual Funding Notice. That’s not quite correct.

Under the Pension Protection Act of 2006, a new rule requires PBGC-covered defined benefit plans to provide an Annual Funding Notice rather than a Summary Annual Report for plan years beginning in 2008 and later. [See PPA Section 503(c) and ERISA Section 104(b)(3).] This Notice is due 120 days after the plan year end for large plan filers (e.g. April 30, 2009); small plan filers have until the due date of the related Form 5500 filing. It should be noted that DOL has not issued regulations (or format/content) relating to this Annual Funding Notice so additional rules may apply.

The traditional SAR format should be used for defined benefit plans that are not subject to PBGC insurance, which generally includes those plans that cover professional services companies (think lawyers and doctors, for example) with no more than 25 employees. Of course, owner-only defined benefit plans are not subject to the SAR or Annual Funding Notice rules.

Regulations for SAR content may be found at ERISA Reg. Section 2520.104b-10(d)(3).