This publication has been developed by the U.S. Department of Labor, 

Employee Benefits Security Administration (EBSA).

To view this and other EBSA publications, visit the agency’s Website at: 

dol.gov/agencies/ebsa. 

To order publications or speak with a benefits advisor, contact EBSA 

electronically at: askebsa.dol.gov.

Or call toll free: 1-866-444-3272

This material will be made available in alternative format to persons with 

disabilities upon request: 

Voice phone: (202) 693-8664

TTY: (202) 501-3911 

This booklet constitutes a small en ti ty compliance guide for pur pos es of the Small Business 

Regulatory Enforcement Fairness Act of 1996.
Table of Conten

Chapter 1: TYPES OF RETIREMENT PLANS ...............................................................

Chapter 2: EARNING RETIREMENT BENEFITS ...........................................................

Chapter 3: PLAN INFORMATION TO REVIEW ...........................................................

Chapter 4: PAYMENT OF BENEFITS .........................................................................

Chapter 5: TAKING YOUR RETIREMENT BENEFIT WITH YOU ......................................

Chapter 6: FILING A CLAIM FOR BENEFITS ............................................................... 

Chapter 7: RESPONSIBILITIES OF PLAN FIDUCIARIES ................................................ 

Chapter 8: YOUR BENEFIT DURING A PLAN TERMINATION OR COMPANY MERGER .....

Chapter 9: POTENTIAL CLAIMS AGAINST YOUR BENEFIT (DIVORCE) ............................

Chapter 10: WHAT TO DO IF YOU HAVE A PROBLEM .................................................

GLOSSARY ..........................................................................................................

INTRODUCTION .................................................................................................. 1

3

5

11

17

21

23

25

29

31

33

35

inTRoduCTion

Your employer’s retirement savings plan is an essential part of your future financial 

security. It is important to understand how your plan works and what benefits you will 

receive. Just as you would keep track of money that you put in a bank or other financial 

institution, it is in your best interest to keep track of your retirement benefits. 

Those responsible for the management and oversight of your retirement plan must 

follow certain rules for operating the plan, handling the plan’s money, and overseeing the 

firms that manage the money. You should also understand and monitor your retirement 

plan and your benefits. You will find Action Items in each chapter to assist you in doing this. 

This booklet helps you understand your plan and explains what information you should 

review periodically and where to go for help with questions. It includes information on:

Different types of retirement plans; 

What information you can get about your plan; 

When and how you can receive retirement benefits;

What to do if you have a question or find a mistake;

The responsibilities of those who manage the plan and its investments; 

Your responsibilities to understand and monitor your plan; and 

Specific circumstances such as how a divorce or change of employer ownership 

may affect your retirement benefit.

Any terms you see that appear in blue in the text are explained in the Glossary.

ReTiRemenT plans CoveRed in This bookleT

This booklet covers private retirement plans that are governed by Federal laws and 

guidelines in the Employee Retirement Income Security Act of 1974 (ERISA) and the Internal 

Revenue Code. ERISA is a Federal statute that sets standards for most employer and union 

sponsored retirement plans in private industry and imposes responsibilities on those 

running the plan. Participants in these plans have certain rights as well as responsibilities.

The rules discussed in this booklet do not apply to all retirement plans. For example, 

the information does not apply to:

State and local government plans, including plans covering public school 

teachers and school administrators; 

Most church plans; and

Plans for Federal government employees.

Also, if you are in a collectively bargained plan, the rules that apply under ERISA may 

be different in some cases. 

The information contained in the following pages answers the most common questions 

about retirement plans. Keep in mind, however, that this booklet is a simplified summary 

of participant rights and responsibilities, not a legal interpretation of ERISA.

1

ChapTeR 1: Types of ReTiRemenT plans

The first step to understanding your retirement benefits is to find out what kind of 

retirement plan your employer has. There are two major types of plans, defined benefit 

and defined contribution, which are described here and outlined in Table 1 on page 4. 

Keep in mind that your employer may have more than one type of plan, and may have 

different participation requirements for each.

A defined benefit plan, funded by the employer, promises you a specific monthly 

benefit at retirement. The plan may state this promised benefit as an exact dollar amount, 

such as $100 per month at retirement. Or, more often, it may calculate your benefit through 

a formula that includes factors such as your salary, your age, and the number of years you 

worked at the company. For example, your pension benefit might be equal to 1 percent 

of your average salary for the last 5 years of employment times your total years of service. 

A defined contribution plan, on the other hand, does not promise you a specific 

benefit amount at retirement. Instead, you and/or your employer contribute money to your 

individual account in the plan. In many cases, you are responsible for choosing how these 

contributions are invested, and deciding how much to contribute from your paycheck 

through pretax deductions. Your employer may add to your account, in some cases by 

matching a certain percentage of your contributions. The value of your account depends 

on how much is contributed and how well the investments perform. At retirement, you 

receive the balance in your account, reflecting the contributions, investment gains or 

losses, and any fees charged against your account. The 401(k) plan is a popular type of 

defined contribution plan. There are four types of 401(k) plans: traditional 401(k), safe 

harbor 401(k), SIMPLE 401(k), and automatic enrollment 401(k) plans. The SIMPLE IRA 

plan, SEP, employee stock ownership plan (ESOP), and profit sharing plan are other 

examples of defined contribution plans. (See explanations of the various types of plans 

in the Glossary at the end.)

Note

1. Employers can choose whether to offer a retirement plan to employees;

Federal law does not require employers to offer or to continue to offer a

plan.

2. The Pension Benefit Guaranty Corporation (PBGC) guarantees payment

of certain retirement benefits for participants in most private defined

benefit plans if the plan is terminated without enough money to pay all

of the promised benefits. The government does not guarantee benefit

payments for defined contribution plans. For more information, see the

PBGC’s Website at pbgc.gov.

3. Some hybrid plans – such as cash balance plans – contain features of both

types of plans described above. See the Glossary for information on this

type of plan.

Action

Ask your plan administrator, human resources office or employer for information 

on what type of plan or plans you have at work. You can ask for a copy of the 

Summary Plan Description (the retirement plan booklet that you should receive 

when you enroll in the plan) and review the information about the plan. 

3
Table 1: Characteristics of Defined Benefit and Defined Contribution Plans

Employer 

Contributions 

and/or Matching 

Contributions

Employee 

Contributions

Managing the 

Investment

Amount of 

Benefits Paid Upon 

Retirement

Type of Retirement 

Benefit Payments

Guarantee of 

Benefits

Leaving the 

Company Before 

Retirement Age

Employer funded. Federal rules 

set amounts that employers 

must contribute to plans in an 

effort to ensure that plans have 

enough money to pay benefits 

when due. There are penalties 

for failing to meet these 

requirements. 

Generally, employees do not 

contribute to these plans.

Plan officials manage the 

investment and the employer 

is responsible for ensuring that 

the amount it has put in the 

plan plus investment earnings 

will be enough to pay the 

promised benefit.

A promised benefit is based 

on a formula in the plan, often 

using a combination of the 

employee’s age, years worked 

for the employer, and/or salary. 

Traditionally, these plans pay 

the retiree monthly annuity 

payments that continue for life. 

Plans may offer other payment 

options.

The Federal Government, 

through the Pension Benefit 

Guaranty Corporation (PBGC), 

guarantees some amount of 

benefits.

If an employee leaves after 

vesting in a benefit but before 

the plan’s retirement age, the 

benefit generally stays with the 

plan until the employee files a 

claim for it at retirement. Some 

defined benefit plans offer 

early retirement options.

There is no requirement that the 

employer contribute, except in 

SIMPLE and safe harbor 401(k)s, 

money purchase plans, SIMPLE IRAs, 

and SEPs. The employer may have 

to contribute in certain automatic 

enrollment 401(k) plans. 

The employer may choose to 

match a portion of the employee’s 

contributions or to contribute 

without employee contributions. In 

some plans, employer contributions 

may be in the form of employer 

stock.

Many plans require the employee to 

contribute in order for an account 

to be established. 

The employee often is responsible 

for managing the investment of 

his or her account, choosing from 

investment options offered by the 

plan. In some plans, plan officials 

are responsible for investing all the 

plan’s assets. 

The benefit depends on 

contributions made by the 

employee and/or the employer, 

performance of the account’s 

investments, and fees charged to 

the account.

The retiree may transfer the 

account balance into an individual 

retirement account (IRA) from 

which the retiree withdraws money, 

or may receive it as a lump sum 

payment. Some plans also offer 

monthly payments through an 

annuity. 

No Federal guarantee of benefits.

The employee may transfer the 

account balance to an individual 

retirement account (IRA) or, in 

some cases, another employer 

plan, where it can continue to grow 

based on investment earnings. 

The employee also may take the 

balance out of the plan, but will owe 

taxes and possibly penalties, thus 

reducing retirement income. Plans 

may cash out small accounts.

Defined 

Contribution Plan

Defined 

Benefit Plan

4
Chapter 2: Earning Retirement

Once you have learned what type of retirement plan your employer offers, you need to 

find out when you can participate in the plan and begin to earn benefits. Plan rules can vary 

as long as they meet the requirements under Federal law. You need to check with your plan 

or review the plan booklet (called the Summary Plan Description) to learn your plan’s rules 

and requirements. Your plan may require you to work for the company for a period of time 

before you may participate in the plan. In addition, there typically is a time frame for when you 

begin to accumulate benefits and earn the right to them (sometimes referred to as “vesting”). 

Find out if you are within the group of employees covered by your employer’s retirement 

plan. Federal law allows employers to include certain groups of employees and exclude 

others from a retirement plan. For example, your employer may sponsor one plan for salaried 

employees and another for union employees. Part-time employees may be eligible if they work

at least 1,000 hours per year, which is about 20 hours per week. So if you work part-time, find 

out if you are covered.

Once you know you are covered, you need to find out when you can begin to participate 

in the plan. You can find this information in your plan’s Summary Plan Description. Federal 

law sets minimum requirements, but a plan may be more generous. Generally, a plan may 

require an employee to be at least 21 years old and to have a year of service with the company 

before the employee can participate in a plan. However, plans may allow employees to begin 

participation before reaching age 21 or completing one year of service. For administrative 

reasons, your participation may be delayed up to 6 months after you meet these age and 

service criteria, or until the start of the next plan year, whichever is sooner. The plan year 

is the calendar year, or an alternative 12-month period, that a retirement plan uses for plan 

administration. Because the rules can vary, it is important that you learn the rules for your plan.

Employers have some flexibility to require additional years of service in some circumstances. 

For example, if your plan allows you to vest (discussed in detail later in this chapter) immediately 

upon participating in the plan, it may require that you work for the company for two years 

before you may participate in the plan. 

Federal law also imposes other participation rules for certain circumstances. For example, 

if you were an older worker when you were hired, you cannot be excluded from participating 

in the plan just because you are close to retirement age. 

Some 401(k) plans and SIMPLE IRA plans enroll employees automatically. This means that 

you will automatically become a participant in the plan unless you choose to opt out. The 

plan will deduct a set contribution level from your paycheck and put it into a predetermined 

investment. If your employer has an automatic enrollment plan, you should receive a 

notice describing the automatic contribution process, when your participation begins, your 

opportunity to opt out of the plan or change your contribution level and where your automatic 

contributions are invested. If you are in a 401(k), the notice will also describe your right to 

change investments, or if you are in a SIMPLE IRA plan, your right to change the financial 

institution where your contributions are invested. 

5
When do you begin To aCCumulaTe benefiTs?

Once you begin to participate in a retirement plan, you need to understand how you accrue 

or earn benefits. Your accrued benefit is the amount of retirement benefits that you have 

accumulated or that have been allocated to you under the plan at any particular point in time. 

Defined benefit plans often count your years of service in order to determine whether you 

have earned a benefit and also to calculate how much you will receive in benefits at retirement. 

Employees in the plan who work part-time, but who work 1,000 hours or more each year, must 

be credited with a portion of the benefit in proportion to what they would have earned if they 

were employed full time. In a defined contribution plan, your benefit accrual is the amount 

of contributions and earnings that have accumulated in your 401(k) or other retirement plan 

account, minus any fees charged to your account by your plan. 

Special rules for when you begin to accumulate benefits may apply to certain types of 

retirement plans. For example, in a Simplified Employee Pension Plan (SEP), all participants 

who earn at least $600 a year from their employers are entitled to receive a contribution. 

Can a plan ReduCe pRomised benefiTs?

Defined benefit plans may change the rate at which you earn future benefits but cannot 

reduce the amount of benefits you have already accumulated. For example, a plan that accrues 

benefits at the rate of $5 a month for years of service through 2017 may be amended to provide 

that for years of service beginning in 2018 benefits will be credited at the rate of $4 per month. 

Plans that make a significant reduction in the rate at which benefits accumulate must provide 

you with written notice generally at least 45 days before the change goes into effect. 

Also, in most situations, if a company terminates a defined benefit plan that does not have 

enough funding to pay all of the promised benefits, the Pension Benefit Guaranty Corporation 

(PBGC) will pay plan participants and beneficiaries some retirement benefits, but possibly less 

than the level of benefits promised. (For more information, see the PBGC’s Website at pbgc.gov.)

In a defined contribution plan, the employer may change the amount of employer 

contributions in the future. Depending on the plan terms, the employer may also be able to 

stop making contributions for a few years or indefinitely.

An employer may terminate a defined benefit or a defined contribution plan, but may not 

reduce the benefit you have already accrued in the plan.

hoW soon do you have a RighT To youR aCCumulaTed benefiTs?

You immediately vest in your own contributions and the earnings on them. This means you 

have earned the right to these amounts without the risk of forfeiting them. But note – there 

are restrictions on actually taking them out of the plan. See the discussion on the rules for 

distributions later in this publication. 

However, you do not necessarily have an immediate right to any contributions made by 

your employer. Federal law provides a maximum number of years a company may require 

employees to work to earn the vested right to all or some of these benefits. (See tables on 

pages 8-9 showing the vesting rules.)

In a defined benefit plan, an employer can require that employees have 5 years of service 

in order to become 100 percent vested in the employer funded benefits (called cliff vesting). 

Employers also can choose a graduated vesting schedule, which requires an employee to work 

7 years in order to be 100 percent vested, but provides at least 20 percent vesting after 3 years, 

40 percent after 4 years, 60 percent after 5 years, and 80 percent after 6 years of service. The 

permitted vesting schedules for current defined benefit plans are shown in Table 3 on page 

9. Plans may provide a different schedule as long as it is more generous than these vesting

6
schedules. (Unlike most defined benefit plans, in a cash balance plan, employees vest in 

employer contributions after 3 years.)

In a defined contribution plan such as a 401(k) plan, you are always 100 percent vested in 

your own contributions to a plan, and in any subsequent earnings from your contributions. 

However, in most defined contribution plans you may have to work several years before you 

are vested in the employer’s matching contributions. (There are exceptions, such as the SIMPLE 

401(k) and safe harbor 401(k), in which you are immediately vested in all required employer 

contributions. You also vest immediately in the SIMPLE IRA and the SEP.)

Currently, employers have a choice of two different vesting schedules for employer matching 

401(k) contributions, which are shown in Table 2 on page 8. Your employer may use a schedule 

in which employees are 100 percent vested in employer contributions after 3 years of service 

(cliff vesting). Under graduated vesting, an employee must be at least 20 percent vested after 2 

years, 40 percent after 3 years, 60 percent after 4 years, 80 percent after 5 years, and 100 percent 

after 6 years. If your automatic enrollment 401(k) plan requires employer contributions, you vest 

in those contributions after 2 years. Automatic enrollment 401(k) plans with optional matching 

contributions follow one of the vesting schedules noted above. 

Employers making other contributions to defined contribution plans, such as a 401(k) plan, 

also can choose between two vesting schedules. For those contributions made since 2007, they 

can choose between the graduated and cliff vesting schedules in Table 2. For contributions 

made prior to 2007, they can choose between the schedules provided in Table 3. 

You may lose some of the employer-provided benefits you have earned if you leave your 

job before you have worked long enough to be vested. However, once vested, you have the 

right to receive the vested portion of your benefits even if you leave your job before retirement. 

But even though you have the right to certain benefits, your defined contribution plan account 

value could decrease after you leave your job as a result of investment performance.

Note

If you leave your company and return, you may be able to count your earlier period of 

employment towards the years of service needed for vesting in the employer-provided benefits. 

Unless your break in service with the company was 5 years or a time equal to the length of 

your pre-break employment, whichever is greater, you likely can count that time prior to your 

break. Because these rules are very specific, you should read your plan document carefully if 

you are contemplating a short-term break from your employer, and then discuss it with your 

plan administrator. If you left employment prior to January 1, 1985, different rules apply. For 

more information, contact the Department of Labor electronically at askebsa.dol.gov or by 

calling toll free 1-866-444-3272.

For Reserve and National Guard units called to active duty, the Uniformed Services 

Employment and Reemployment Rights Act (USERRA) requires that the period of military duty 

be counted as covered service with the employer for eligibility, vesting, and benefit accrual 

purposes. Returning service members are treated as if they had been continuously employed 

regardless of the type of retirement plan the employer has adopted. However, a person who is 

reemployed is entitled to accrued benefits resulting from employee contributions only to the 

extent that he or she actually makes the contributions to the plan.

7
Vesting Rules

Generally, an employer must count your years of service for vesting credit starting with your 

date of employment. Two exceptions provide that your employer may start counting your 

years of service with the first plan year following (1) your 18th birthday if you were under 18 

years of age when you started working there, and (2) the date you start contributing to a 401(k) 

plan if you elected not to contribute when you first were eligible. 

Plans can allow employees the right to employer-provided benefits sooner than indicated in 

the following tables.

 Con ibu ions

( se Table in ffe on a e ou ef mploye )

Table 2 below shows the current vesting schedules, as of 2002, for employer matching 401(k) 

plan contributions, and for other employer contributions to a defined contribution plan as of 

2007.

TABLE 2: Effective Date 1/01/02 - Present — 

for 401(k) Matching Contributions

Effective Date 1/01/07 – Present — 

for Other Defined Contribution 

Employer Contributions

gRaduaTed vesTing

Years of Service Non-forfeitable Percentage 

2

3

4

5

6

20%

40%

60%

80%

100%

Cliff Vesting

Less than 3 years of service - 0% Vested

At least 3 years of service - 100% Vested

Table 3 is for employees in a defined benefit plan. It is also for employees receiving other 

employer contributions to a defined contribution plan before 2007*, employer matching 401(k) 

contributions prior to 2002, and employees in a defined contribution plan who left an employer 

after December 31, 1988. 

* If your plan is top heavy, Table 2 applies.

8
9

Table 4 is for employees who left before 1989.

TABLE 4: Effective Date 1974 - 12/31/88** — 

for all Defined Benefit and Defined Contribution 

Employer Contributions 

adua ed es ing

Years of Service Non-forfeitable Percentage 

5

6

7

8

9

10

11

12

13

14

15

25%

30%

35%

40%

45%

50%

60%

70%

80%

90%

100%

Cliff Vesting

Less than 10 years of service - 0% Vested

At least 10 years of service - 100% Vested

Years of Service

3 20%

4 40%

5 60%

6 80%

100%

TABLE 3: Effective Date 1/01/89 – Present* —

for Defined Benefit Employer Contributions

Effective Date 1/02/89 - 2007

for Other Defined Contribution Employer 

Contributions Effective Date 1/01/89 - 2002 - 

401(k) Matching Employer Contributions

7

Cliff Vesting

Less than 5 years of service - 0% Vested

At least 5 years of service - 100% Vested

GRADUATED VESTING

Non-forfeitable Percentage 

Rule of 45

If employee’s age and years of service total 45, and the employee 

has at least 5 years of service, then 50% of the benefits must be vested, 

with at least 10% vesting for each year thereafter.
Note

For plans subject to collective bargaining agreements, the effective date is the earlier 

of the date on which the last of the collective bargaining agreements under which 

the plan is maintained terminates or — 

**01/01/99.

**01/01/89.

Find out if you are covered by an employer plan.

Find out how soon you can start participating in and/or contributing to your 

retirement plan after you start working for a company.

Get a Summary Plan Description.

Review your plan document or Summary Plan Description to understand how you 

earn benefits in your plan.

Find your plan’s vesting schedule to check when you are fully vested. If you are 

thinking of changing jobs, check your plan to see if working longer will allow you 

to vest more fully in your employer’s contributions.

10
Chapter 3: Plan Information t

If you have a question about your retirement plan, you can start by looking for an 

answer in the information that the plan provides. You can request this information from 

your plan administrator, the person who is in charge of running the plan. Your employer 

can tell you how to contact your plan administrator.

nfo ma ion p ovided by he e i emen plan

Each retirement plan is required to have a formal, written plan document that details 

how it operates and its requirements. As noted previously, there is also a booklet that 

describes the key plan rules, called the Summary Plan Description (SPD), which should 

be much easier to read and understand. The SPD also should include a summary of any 

material changes to the plan or to the information required to be in the SPD. In many cases, 

you can start with the SPD and then look at the plan document if you still have questions. 

In addition, plans must provide you with a number of notices. Some of the key notices 

are described in Table 5 on page 12.

For example, defined contribution plans, such as 401(k) plans, generally are required 

to provide advance notice to employees when a “blackout period” occurs. A blackout 

period is when a participant’s right to direct investments, take loans, or obtain distributions 

is suspended for a period of at least three consecutive business days. Blackout periods 

can often occur when plans change recordkeepers or investment options.

Some plan information, such as the Summary Plan Description, must be provided 

to you automatically and without charge at the time periods indicated below. You may 

request a Summary Plan Description at other times, but your employer might charge you 

a copying fee. You must ask the plan if you want other information, such as a copy of the 

written plan document or the plan’s Form 5500 annual financial report, and you may have 

to pay a copying fee. See Table 5 on page 12 and Table 6 on page 14. Many employers 

provide benefit information on a Website.

In some cases, plans provide information more frequently than required by Federal 

law. For instance, some plans allow participants to check their statements online or by 

telephone.

The plan’s annual financial report (Form 5500) is also available. You can find the report 

online at dol.gov/agencies/ebsa or by contacting the U.S. Department of Labor, EBSA 

Public Disclosure Facility, Room N-1515, 200 Constitution Avenue, NW, Washington, D.C. 

20210, telephone: (202) 693-8673. There is a copying fee if the report is over 100 pages. In 

addition, if your plan administrator does not provide you, as a participant covered under 

the plan, with a copy of the Summary Plan Description automatically or after you request 

it, you may contact the Department of Labor electronically at askebsa.dol.gov or by calling 

toll free 1-866-444-3272 for help.

11
12

Summary Plan 

Description (SPD)

Automatic 

Enrollment Notice

Individual Benefit 

Statement

Annual Funding 

Notice

Plan and 

Investment 

Information for 

Participant - 

Directed Plans

TABLE 5: Key Information Your Plan Administrator Must Provide Automatically

What Description When

Within 90 days of becoming a 

participant in the plan; and 

An updated copy every 10 

years (5 years if the plan has 

been amended).

Generally, at least 30 days 

before you are eligible to 

participate; and 

At least 30 days before the 

beginning of each subsequent 

plan year. 

At least quarterly for 

participant-directed defined 

contribution plans; 

At least annually for nonparticipant-directed defined 

contribution plans; or 

At least every 3 years for 

defined benefit plans.

Generally, within 120 days of the 

end of the plan year.

Before a participant can direct 

investments for the first time;

At least annually thereafter; and

At least quarterly for fees and 

expenses actually paid.

A summary version of the plan 

document and other important 

plan information, in easier-tounderstand language.

For plans with automatic 

enrollment, a description of 

the automatic enrollment 

process, the percentage of 

salary being deferred, the 

default investment used for 

automatic contributions, your 

right to opt out of the plan, 

your right to change deferral 

percentage and investments, 

and how to find information 

about the plan’s other 

investments. 

Statement providing 

information about your 

account balance and vested 

benefits. Depending on the 

type of plan you have, the 

statement may also include 

the value of the investments in 

the account and information 

describing your right to direct 

investments.

Basic information about the 

status and financial condition 

of the defined benefit 

pension plan including, 

among other things, the plan’s 

funding percentage; assets 

and liabilities; participant 

demographic information; 

funding policy; endangered, 

critical or critical and declining 

status; a description of the 

benefits guaranteed by the 

PBGC.

Plan and investment related 

information, including 

information about fees and 

expenses, so participants can 

make informed decisions 

to manage their individual 

accounts. The investment 

related information must be 

provided in a format, such
13

TABLE 5 cont.: Key Information Your Plan Administrator Must Provide Automatically

What Description When

as a chart, that allows for 

comparison among the plan’s 

investment options.

Summary 

of Material 

Modifications

A summary of significant plan 

changes or changes in the 

information required to be in 

the SPD.

Within 7 months of the end of the 

plan year in which the changes were 

made.

Summary Annual 

Report

A summary of financial 

information filed by the plan 

on its Form 5500 Annual 

Within 9 months after the end of 

the plan year or 2 months after the 

annual report filing deadline. Return/Report. If your plan is 

required to provide an annual 

funding notice, your plan is not 

required to provide this report.

Notice of Notice of any significant At least 45 days before the effective 

Significant reduction in the rate of date of the plan amendment.

Reduction in Future 

Benefit Accruals

future benefit accruals, 

or the elimination of or 

significant reduction in an 

early retirement benefit or 

retirement-type subsidy. 

Applies to defined benefit 

plans and certain defined 

contribution plans.

Blackout Notice Notice of a period of more 

than 3 consecutive business 

days when there is a temporary 

suspension, limitation or 

restriction on directing or 

diversifying plan assets, 

obtaining loans, or obtaining 

distributions. Applies to most 

401(k) or other individual 

account plans.

Generally, at least 30 days before the 

blackout date.

Notice to 

Participants of 

Underfunded Plan

For defined benefit plans that 

are less than 80% funded, the 

notice of the funding level of 

the plan and information on 

PBGC guarantees.

Within 2 months after the due date 

for filing the annual report.

Notice of Critical or Notice that a multiemployer Not later than 30 days after the plan 

Endangered Status pension benefit plan is in 

critical or endangered status 

because of funding or liquidity 

problems. The notice must 

include an explanation of 

the possibility that certain 

adjustable benefits may be 

reduced.

actuary’s annual certification, if the 

actuary certifies that the plan is in 

critical or endangered status.
14

TABLE 6: Key Information Your Plan Administrator Must Provide Upon Written Request

Plan Documents Documents that provide the Reasonable copying charge

terms of the plan, including 

collective bargaining 

agreements and trust 

agreements.

Annual Report 

(Form 5500) – most 

recent report

Financial information about 

the plan that most plans 

are required to file with the 

government within 7 months 

of the end of the plan year.

Reasonable copying charge

What Description Cost

What plan information should you review reg

If you are in a defined benefit plan, you will receive an individual benefit statement once 

every 3 years. Review its description of the total benefits you have earned and whether you are 

vested in those benefits. Also check to make sure your date of birth, date of hire, and the other 

information included is correct. You will also receive an annual notice of the plan’s funding status.

Defined contribution plans, including 401(k) plans, also must send participants individual 

benefit statements either quarterly, if participants direct the investments of their accounts, 

or annually, if they do not. When you receive a statement, check it to make sure all of the 

information is accurate. This information may include:

Salary level

Amounts that you and your employer have contributed

Years of service with the employer

Home address

Social Security Number

Beneficiary designation

Marital status

The performance of your investments (defined contribution plan participants)

Fees paid by the plan and/or charged to participants. (For more information, contact 

us electronically at askebsa.dol.gov or call our toll free number at 1-866-444-3272 

to ask for the booklet A Look at 401(k) Plan Fees.) Check with your plan to see if 

this information is included in materials on your investment options, the benefit 

statement, the Summary Plan Description or the plan’s Annual Report (Form 5500). 

See Chapter 7 for more information on the fees that your employer can charge to 

your account.

Action 

Make sure you have received the plan’s Summary Plan Description and read it for 

information on how your plan works.

Read other documents you receive from your plan to make sure that you keep up 

with any plan changes, and check that the information on your benefit statement 

is accurate.
If you are in a defined contribution plan, ask for information on the investment choices 

available in the plan, and find out when and how you can change your plan account 

investments.

If you suspect errors in your plan information, contact your plan administrator or the 

human resources department. 

If there have been changes in your personal information, such as a marriage, divorce or 

change of address, contact your plan administrator or the human resources department. 

Keep your plan documents in a safe place in case questions arise in the future.

15

Chapter 4  Payment of Be

Once you understand what type of plan you have, how you earn benefits, and how 

much your benefits will be, it is important to learn when and how you can receive them.

When can you begin to receive retirement 

There are several points to keep in mind in determining when you can receive benefits: 

1. Federal law provides guidelines, shown in Table 7 below, for when plans

must start paying retirement benefits.

2. Plans can choose to start paying benefits sooner. The plan documents will

state when you may begin receiving payments from your plan.

3. You must file a claim for benefits for your payments to begin. This takes

some time for administrative reasons. (See Chapter 6.)

TABLE 7: Requirements Under Federal Law for Payment of Retirement Benefits

Under Federal law, your plan must allow you to begin receiving benefits*

the later of -

Reaching age 65 or the age your plan considers to 

be normal retirement age (if earlier)

Or -

Terminating your 

service with the 

employer 

Or -

10 years of 

service 

*For administrative reasons, benefits do not begin immediately after meeting these

conditions. At a minimum, your plan must provide that you will start receiving benefits 

within 60 days after the end of the plan year in which you satisfy the conditions. Also, you 

need to file a claim under your plan’s procedures. (See Chapter 6.)

Under certain circumstances, your benefit payments may be suspended if you continue 

to work beyond normal retirement age. The plan must notify you of the suspension during 

the first calendar month or payroll period in which payments are withheld. This information 

should also be included in the Summary Plan Description. A plan also must advise you of 

its procedures for requesting an advance determination of whether a particular type of 

reemployment would result in a suspension of benefit payments. If you are a retiree and 

are considering taking a job, you may wish to write to your plan administrator and ask if 

your benefits would be suspended. 

Table 7 shows the general requirements for when payments begin. Listed below are 

some permitted variations:

Although defined benefit plans and money purchase plans generally allow you 

to receive benefits only when you reach the plan’s retirement age, some have 

provisions for early retirement.

17
401(k) plans often allow you to receive your account balance when you leave your job. 

401(k) plans may allow for distributions while still employed if you have reached age 

591⁄2 or if you suffer a hardship.

Profit sharing plans may permit you to receive your vested benefit after a specific 

number of years or whenever you leave your job.

A phased retirement option allows employees at or near retirement age to reduce 

their work hours to part-time, receive benefits, and continue to earn additional funds. 

ESOPs do not have to pay out any benefits until 1 year after the plan year in which 

you retire, or as many as 6 years if you leave for reasons other than retirement, death, 

or disability. 

Warnin

1. You may owe current income taxes – and possibly tax penalties — on your

distribution if you take money out before age 591⁄2, unless you transfer it to an 

IRA or another tax-qualified retirement plan.

2. Taking all or a portion of your funds out of your account before retirement age

will mean you have less in retirement benefits.

When is the latest you may begin to take payment of your b

Federal law sets a mandatory date by which you must start receiving your retirement benefits, 

even if you would like to wait longer. This mandatory start date generally is set to begin on April 

1 following the calendar year in which you turn 701⁄2 or, if later, when you retire. However, your 

plan may require you to begin receiving distributions even if you have not retired by age 701⁄2.

In what form will your benefits b

If you are in a defined benefit or money purchase plan, the plan must offer you a benefit 

in the form of a life annuity, which means that you will receive equal, periodic payments, often 

as a monthly benefit, which will continue for the rest of your life. Defined benefit and money 

purchase plans may also offer other payment options, so check with the plan. If you are in a 

defined contribution plan (other than a money purchase plan), the plan may pay your benefits 

in a single lump sum payment as well as offer other options, including payments over a set 

period of time (such as 5 or 10 years) or an annuity with monthly lifetime payments. 

If you are leaving your employer before retirement age, see the next chapter.

Can a benefit continue for your spouse should you die

In a defined benefit or money purchase plan, unless you and your spouse choose otherwise, 

the form of payment will include a survivor’s benefit. This survivor’s benefit, called a qualified 

joint and survivor annuity (QJSA), will provide payments over your lifetime and your spouse’s 

lifetime. The benefit payment that your surviving spouse receives must be at least half of the 

benefit payment you received during your joint lives. While the survivor’s benefit is typically 

50 percent, some plans provide for other options, such as 75 percent. Note that your monthly 

benefit payments will be reduced because the benefit payments will continue for your spouse’s 

lifetime should you die first. 

18
19

If you choose not to receive the survivor’s benefit, you will receive benefits for your lifetime 

only. You must follow specific rules to waive the survivor benefit. You and your spouse must 

receive a written explanation of the QJSA and, within certain time limits, you must make a 

written waiver and your spouse must sign a written consent to the alternative payment form 

without a survivor’s benefit, stating that you both understand that benefit payments will end 

when you die. Your spouse’s signature must be witnessed by a notary or plan representative.

In most 401(k) plans and other defined contribution plans, the plan is written so different 

protections apply for surviving spouses. In general, in most defined contribution plans, if you 

should die before you receive your benefits, your surviving spouse will automatically receive 

them. If you wish to select a different beneficiary, your spouse must consent by signing a waiver, 

witnessed by a notary or plan representative.

If you were single when you enrolled in the plan and subsequently married, it is important 

that you notify your employer and/or plan administrator and change your status under the plan. 

If you do not have a spouse, it is important to name a beneficiary.

If you or your spouse left employment prior to January 1, 1985, different rules apply. For 

more information on these rules, contact the Department of Labor electronically at askebsa.

dol.gov or by calling toll free 1-866-444-3272. 

Can you borrow from your 401(k) plan 

401(k) plans are permitted to – but not required to – offer loans to participants. The loans 

must charge a reasonable rate of interest and be adequately secured. The plan must include 

a procedure for applying for the loans and the plan’s policy for granting them. Loan amounts 

are limited to the lesser of 50 percent of your account balance or $50,000 and must be repaid 

within 5 years (unless the loan is used to purchase a principal residence). 

Can you get a distribution from your plan if you are not yet 65 or 

normal retirement age but are facing a significant financi

Again, defined contribution plans are permitted to – but not required to – provide 

distributions in case of hardship. Check your plan booklet to see if it does permit them and 

what circumstances are included as hardships. 

Action 

Find out when and in what form you can receive your benefits at retirement.

Fill out the necessary forms to update information with your retirement plan.

Notify the retirement plan of any change of address or marital status.

Keep all documents for your records, including Summary Plan Descriptions, company 

memos, and individual benefit statements.

For tax information, look at Internal Revenue Service Publication 575 (Pension and 

Annuity Income) by visiting irs.gov/retirement and clicking on “Forms & Pubs”.

Chapter 5  Taking Your Retiement  Benef

If you leave an employer before you reach retirement age, whether or not you can take 

your benefits out and/or roll them into another tax-qualified plan or account will depend 

on what type of plan you are in.

If you leave before retirement, can you take your retirem

you?

If you are in a defined benefit plan (other than a cash balance plan), you most likely 

will be required to leave the benefits with the retirement plan until you become eligible to 

receive them. As a result, it is very important that you update your personal information 

with the plan administrator regularly and keep current on any changes in your former 

employer’s ownership or address. 

If you are in a cash balance plan, you probably will have the option of transferring at 

least a portion of your account balance to an individual retirement account or to a new 

employer’s plan. 

If you leave your employer before retirement age and you are in a defined contribution 

plan (such as a 401(k) plan), in most cases you will be able to transfer your account balance 

out of your employer’s plan. 

What choices do you have for taking your defined contributio

A lump sum – you can choose to receive your benefits as a single payment from 

your plan, effectively cashing out your account. You may need to pay income 

taxes on the amount you receive, and possibly a penalty.

A rollover to another retirement plan – you can ask your employer to transfer 

your account balance directly to your new employer’s plan if it accepts such 

transfers. 

A rollover to an IRA – you can ask your employer to transfer your account 

balance directly to an individual retirement account (IRA). 

If your account balance is less than $5,000 when you leave the employer, 

the plan can make an immediate distribution without your consent. If this 

distribution is more than $1,000, the plan must automatically roll the funds into 

an IRA it selects, unless you elect to receive a lump sum payment or to roll it 

over into an IRA you choose. The plan must first send you a notice allowing 

you to make other arrangements, and it must follow rules regarding what type 

of IRA can be used (i.e., it cannot combine the distribution with savings you 

have deposited directly in an IRA). Rollovers must be made to an entity that is 

qualified to offer individual retirement plans. Also, the rollover IRA must have 

investments designed to preserve principal. The IRA provider may not charge 

more in fees and expenses for such plans than it would to its other individual 

retirement plan customers. 

Please note: If you elect a lump sum payment and do not transfer the money to 

another retirement account (employer plan or IRA other than a Roth IRA), you will owe 

a tax penalty if you are under age 591⁄2 and do not meet certain exceptions. In addition, 

you may have less to live on during your retirement. Transferring your retirement plan 

account balance to another plan or an IRA when you leave your job will protect the tax 

advantages of your account and preserve the benefits for retirement. 

21
What happens if you leave a job and later r

If you leave an employer for whom you have worked for several years and later return, you 

may be able to count those earlier years toward vesting. Generally, a plan must preserve the 

service credit you have accumulated if you leave your employer and then return within five 

years. Service credit refers to the years of service that count towards vesting. Because these 

rules are very specific, you should read your plan document carefully if you are contemplating 

a short-term break from your employer, and then discuss it with your plan administrator. If you 

left employment prior to January 1, 1985, different rules apply.

If you retire and later go back to work for a former employer, you must be allowed to continue 

to accrue additional benefits, subject to a plan limit on the total years of service credited under 

the plan. 

Action 

If you are leaving an employer before retirement, find out whether you can roll your 

benefits into a new plan or into an IRA.

If you are leaving your benefits in your former employer’s plan, be sure to keep 

your contact information up to date with the former employer, and keep track of 

the employer’s contact information.

If you are considering taking your benefits out as a lump sum, find out what taxes 

and penalties you will owe, and make a plan on how you will replace that income 

in retirement.

22
Chapter 6  Filing a Claim for Be

Federal retirement law requires all plans to have a reasonable written procedure for 

processing your benefits claim and appeal if your claim is denied. The Summary Plan 

Description (SPD) should include your plan’s claims procedures. Usually, you fill out the 

required paperwork and submit it to the plan administrator, who then can tell you what 

your benefits will be and when they will start.

Filing a claim and filing an appe

If there is a problem or a dispute about whether you qualify for benefits or what 

amount you should receive, check your plan’s claims procedure. Federal law outlines the 

following claims procedures requirements:

Once your claim is filed, the plan can take up to 90 days to reach a decision, or 

180 days if it notifies you that it needs an extension. 

If your claim is denied, you must receive a written notice, including specific 

information about why your claim was denied and how to file an appeal. 

You have 60 days to request a full and fair review of your denied claim, using 

your plan’s appeals procedure. 

The plan can take up to 60 days to review your appeal, as well as an additional 

60 days if it notifies you of the need for an extension. The plan must then send 

a written notice telling you whether the appeal was granted or denied. 

If the appeal is denied, the written notice must tell you the reason, describe 

any additional appeal levels, and give you a statement regarding your rights to 

seek judicial review of the plan’s decision.

If you believe the plan failed to follow ERISA’s requirements, you may decide to seek 

legal advice if the plan denies your appeal. You also can contact the Department of Labor 

concerning your rights under ERISA electronically at askebsa.dol.gov or by calling toll 

free 1-866-444-3272. 

For more information on claims procedures, see the Department of Labor publication 

Filing a Claim for Your Retirement Benefits, at dol.gov/agencies/ebsa. To obtain a copy, 

contact the Department of Labor electronically at askebsa.dol.gov or call toll free 1-866-

444-3272.

Action 

Contact your plan administrator to get the paperwork that you need to file a 

claim to start receiving retirement benefits.

Contact the Department of Labor (EBSA) electronically at askebsa.dol.gov or 

by calling toll free 1-866-444-3272 if you have questions about your plan or your 

rights under ERISA. 

23

Chapter 7  Responsibilities of Plan Fidu

In every retirement plan, there are individuals or groups of people who use their 

own judgment or discretion in administering and managing the plan or who have the 

power to or actually control the plan’s assets. These individuals or groups are called plan 

fiduciaries. Fiduciary status is based on the functions that the person performs for the 

plan, not just the person’s title.

Does your plan have to identify those responsible for operating

A plan must name at least one fiduciary in the written plan document, or through a 

process described in the plan, as having control over the plan’s operations. This fiduciary 

can be identified by office or by name. For some plans, it may be an administrative 

committee or the company’s board of directors. Usually, a plan’s fiduciaries will include 

the trustee, investment managers, and the plan administrator. The plan administrator is 

usually the best starting point for questions you might have about the plan. 

What are the responsibilities of plan fiduc

Fiduciaries have important responsibilities and are subject to certain standards of 

conduct because they act on behalf of the participants in the plan. These responsibilities 

include:

Acting solely in the interest of plan participants and their beneficiaries, with 

the exclusive purpose of providing benefits to them;

Carrying out their duties with skill, prudence, and diligence;

Following the plan documents (unless inconsistent with ERISA);

Diversifying plan investments;

Paying only reasonable expenses of administering the plan and investing its 

assets; and

Avoiding conflicts of interest.

The fiduciary also is responsible for selecting the investment providers and the 

investment options, and for monitoring their performance. Some plans, such as most 

401(k) or profit sharing plans, can be set up to permit participants to choose the investments 

in their accounts (within certain investment options provided by the plan). If the plan is 

properly set up to give participants control over their investments, then the fiduciary is not 

liable for losses resulting from the participant’s investment decisions. Department of Labor 

rules provide guidance designed to make sure participants have sufficient information 

on the specifics of their investment options so they can make informed decisions. This 

information includes: 

A description of each investment option, including the investment goals, risk, 

and return characteristics; 

Information about any designated investment managers;

An explanation of when and how to request changes in investments, plus any 

restrictions on when you can change investments;

25
A statement of the fees that may be charged to your account when you change 

investment options or buy and sell investments; and

The name, address, and telephone number of the plan fiduciary or other person 

designated to provide certain additional information on request. 

A statement that the plan is intended to follow the Department of Labor rules and that the 

fiduciaries may be relieved of liability for losses that are the direct and necessary result of a 

participant’s investment instructions also must be included.

For an automatic enrollment plan, such as an automatic enrollment 401(k) plan, the plan 

fiduciary selects the investments for employees’ automatic contributions if the employees 

do not provide direction. If the plan is properly set up, using certain default investments that 

generally minimize the risk of large losses and provide long-term growth, and providing notice 

of the plan’s automatic enrollment process, then the fiduciary may be relieved of liability for 

losses resulting from investing in these default alternatives for participants. The plan also must 

provide a broad range of investments for participants to choose from and information on the 

plan’s investments so participants can make informed decisions. Department of Labor rules 

provide guidance on the default investment alternatives that can be used and the notice and 

information to be provided to participants. 

What if a plan fiduciary fails to carry out its respon

Fiduciaries that do not follow the required standards of conduct may be personally liable. 

If the plan lost money because of a breach of their duties, fiduciaries would have to restore 

those losses, or any profits received through their improper actions. For example, if an employer 

did not forward participants’ 401(k) contributions to the plan, they would have to pay back the 

contributions to the plan as well as any lost earnings, and return any profits they improperly 

received. Fiduciaries also can be removed from their positions as fiduciaries if they fail to follow 

the standards of conduct. 

When does the employer need to deposit employee contributions in t

If you contribute to your retirement plan through deductions from your paycheck, then 

the employer must follow certain rules to make sure that it deposits the contributions in a 

timely manner. The law says that the employer must deposit participant contributions as soon 

as it is reasonably possible to separate them from the company’s assets, but no later than the 

15th business day of the month following the payday. For small plans (those with fewer than 

100 participants), salary reduction contributions deposited with the plan no later than the 

7th business day following withholding by the employer will be considered contributed in 

compliance with the law. In the Annual Report (Form 5500), the plan administrator is required 

to include information on whether deposits of contributions were made on a timely basis. 

For more information, see the Department of Labor’s “Ten Warning Signs That Your 401(k) 

Contributions Are Being Misused,” at dol.gov/agencies/ebsa for indicators of possible delays 

in depositing contributions.

What are the plan fiduciaries’ obligations regarding the fees and expense

the plan? Can the plan charge my defined contribution plan accou

Plan fiduciaries have a specific obligation to consider the fees and expenses paid by your 

plan for its operations. ERISA’s fiduciary standards, discussed above, mean that fiduciaries must 

26
27

establish a prudent process for selecting investment alternatives and service providers to the 

plan; ensure that fees paid to service providers and other expenses of the plan are reasonable 

in light of the level and quality of services provided; select investment alternatives that are 

prudent and adequately diversified; and monitor investment alternatives and service providers 

once selected to see that they continue to be appropriate choices.

The plan may deduct fees from your defined contribution plan account. Plan administration 

fees and investment fees can be deducted from your account either as a direct charge or 

indirectly as a reduction of your account’s investment returns. Fees for individual services, such 

as for processing a loan from the plan or a Qualified Domestic Relations Order (see Chapter 

9), also may be charged to your account. 

If you direct the investments in your account, your plan will provide information about your 

rights and responsibilities under the plan related to directing your investments. This includes 

plan and investment related information, including information about fees and expenses, that 

you need to make informed decisions about the management of your account. The investment 

related information is provided in a format, such as a chart, that allows for a comparison among 

the plan’s investment options. The plan should provide this information before you can direct 

investments for the first time and annually thereafter with information on the fees and expenses 

actually paid provided at least quarterly.

For more information, see the Department of Labor brochure A Look at 401(k) Plan Fees

at dol.gov/agencies/ebsa. To obtain a copy, contact the Department of Labor electronically at 

askebsa.dol.gov or call toll free at 1-866-444-3272.

Action

If you have any questions about the management of the plan and its assets, contact 

your plan administrator.

ChapTeR 8: youR benefiT duRing a plan TeRminaTion

oR Company meRgeR

As noted at the beginning of this booklet, employers are not required to offer a 

retirement plan and plans can be modified and/or terminated.

What happens when a plan is termin

Federal law provides some measures to protect employees who participated in plans 

that are terminated, both defined benefit and defined contribution. When a plan is 

terminated, the current employees must become 100 percent vested in their accrued 

benefits. This means you have a right to all the benefits that you have earned at the time 

of the plan termination, even benefits in which you were not vested and would have lost 

if you had left the employer. If there is a partial termination of a plan (for example, if your 

employer closes a particular plant or division that results in the end of employment of a 

substantial percentage of plan participants) the affected employees must be immediately 

100 percent vested to the extent the plan is funded.

What if your terminated defined benefit plan does not have enoug

to pay the benefit

The Federal Government, through the Pension Benefit Guaranty Corporation (PBGC), 

insures most private defined benefit plans. For terminated defined benefit plans with 

insufficient money to pay all of the benefits, the PBGC will guarantee the payment of 

your vested pension benefits up to the limits set by law. For further information on plan 

termination guarantees, contact the Pension Benefit Guaranty Corporation toll free at 

1-800-400-7242, or visit the Website at pbgc.gov.

What happens if a defined contribution plan is ter

The PBGC does not guarantee benefits for defined contribution plans. If you are in 

a defined contribution plan that is in the process of terminating, the plan fiduciaries and 

trustees should take actions to maintain the plan until they terminate it and pay out the 

assets. 

Is your accrued benefit protected if your plan merges wi

Your plan rules and investment choices are likely to change if your company merges 

with another. Your employer may choose to merge your plan with another plan. If your 

plan is terminated as a result of the merger, the benefits that you have accrued cannot be 

reduced. You must receive a benefit that is at least equal to the benefit you were entitled 

to before the merger. In a defined contribution plan, the value of your account may still 

fluctuate after the merger based on the performance of the investments.

Special rules apply to mergers of multiemployer defined benefit plans, which generally 

are under the jurisdiction of the PBGC. Contact the PBGC for further information.

What if your employer goes bank

Generally, your retirement assets should not be at risk if your employer declares 

bankruptcy. Federal law requires that retirement plans fund promised benefits adequately 

and keep plan assets separate from the employer’s business assets. The funds must be 

29
held in trust or invested in an insurance contract. The employers’ creditors cannot make a claim 

on retirement plan funds. However, it is a good idea to confirm that any contributions your 

employer deducts from your paycheck are forwarded to the plan’s trust or insurance contract 

in a timely manner.

Significant business events such as bankruptcies, mergers, and acquisitions can result in 

employers abandoning their individual account plans (e.g., 401(k) plans), leaving no plan fiduciary 

to manage it. In this situation, participants often have great difficulty in accessing the benefits they 

have earned and have no one to contact with questions. Custodians such as banks, insurers, and 

mutual fund companies are left holding the assets of these plans but do not have the authority 

to terminate the plans and distribute the assets. In response, the Department of Labor issued 

rules to create a voluntary process for the custodian to wind up the plan’s business so that benefit 

distributions can be made and the plan terminated. Information about this program can be 

found on the Department of Labor’s Website at dol.gov/agencies/ebsa. 

Action 

If your former employer has gone out of business, arrangements should have been 

made so a plan official remains responsible for the payment of benefits and other 

plan business. If you are entitled to benefits and are unable to contact the plan 

administrator, contact EBSA electronically at askebsa.dol.gov or by calling toll free 

1-866-444-3272. 

Keep a file with information on your plan and company. If the company no longer 

exists under its former name, you might find some information on the Internet by 

entering the former name in a search engine. If your plan is abandoned, use the 

search function on the EBSA Website at dol.gov/agencies/ebsa to find out if the plan’s 

custodian is terminating the plan and the custodian’s contact information.

If your plan merges, make sure you read the communications about changes in your 

plan, including changes in benefits and investment choices.

If your retirement benefit remains with a former employer, keep current on any 

changes your former employer makes, including changes of address, mergers, or 

employer name. 

If you move, give the plan your new contact information.

30
Chapter 9  Potential Claims Against Y

(Divor

In general, your retirement plan is safe from claims by other people. Creditors to 

whom you owe money cannot make a claim against funds that you have in a retirement 

plan. For example, if you leave your employer and transfer your 401(k) account into an 

individual retirement account (IRA), creditors generally cannot get access to those IRA 

funds even if you declare bankruptcy.

Federal law does make an exception for family support and the division of property 

at divorce. For many workers, retirement savings is one of their most significant assets. 

For this reason, whether and how to divide a participant’s interest in a retirement plan 

are often important considerations in separation, divorce, and other domestic relations 

proceedings. While the division of marital property generally is governed by state domestic 

relations law, any assignments of retirement benefits also must comply with Federal law 

(ERISA and the Internal Revenue Code). 

A state court can award part or all of a participant’s retirement benefit to the spouse, 

former spouse, child, or other dependent. The recipient named in the order is called the 

alternate payee. The court issues a specific court order, called a domestic relations order, 

which can be in the form of a state court judgment, decree or order, or court approval 

of a property settlement agreement. The order must relate to child support, alimony, or 

marital property rights, and must be made under state domestic relations law. 

The plan administrator determines if the order is a qualified domestic relations order 

(QDRO) under the plan’s procedures and then notifies the participant and the alternate 

payee. 

To be a QDRO, the order must contain the following information:

The participant’s name and last known mailing address;

The name and last known mailing address of each alternate payee;

The name of the plan; 

The amount, percentage, or method of determining the amount or percentage of 

the benefit to be paid to the alternate payee, and 

The number of payments or time period to which the order applies. 

The specific content of the rest of the order will depend on the type of retirement plan, 

the nature of the participant’s benefits, the purpose for issuing the order, and the intent 

of the parties drafting the order. A QDRO must provide for a type or form of benefit that 

the plan already allows. A QDRO cannot require the plan to provide increased benefits. 

In general, a QDRO may assign survivor benefits to a former spouse. Participants and 

alternate payees drafting a QDRO should read the plan’s summary plan description and 

other plan documents to understand the survivor benefits available under the plan. A 

QDRO cannot require a plan to pay benefits to an alternate payee that, under a QDRO 

previously recognized by the plan, are required to be paid to another alternate payee.

If the participant is still employed, a QDRO can require payment to the alternate payee 

to begin on or after the participant’s earliest possible retirement age available under the 

plan. 

These rules apply to both defined benefit and defined contribution plans. For 

additional information, see EBSA’s publication, QDROs – The Division of Retirement 

Benefits Through Qualified Domestic Relations Orders. To order a copy, contact EBSA 

electronically at askebsa.dol.gov or call toll free 1-866-444-3272.

31
Action 

If you are involved in a divorce, you should discuss these issues with your plan administrator and 

your attorney.
Chapter 10  What to Do If You Have

Sometimes, retirement plan administrators, managers, and others involved with the 

plan make mistakes. Some examples include:

Your 401(k) or individual account statement is consistently late or comes at 

irregular intervals; 

Your account balance does not appear to be accurate; 

Your employer fails to transmit your contribution to the plan on a timely basis; 

Your plan administrator does not give or send you a copy of the Summary Plan 

Description; or

Your benefit is calculated incorrectly.

It is important for you to know that you can follow up on any possible mistakes without 

fear of retribution. Employers are prohibited by law from firing or disciplining employees 

to avoid paying a benefit, as a reprisal for exercising any of the rights provided under a plan 

or Federal retirement law (ERISA), or for giving information or testimony in any inquiry 

or proceeding related to ERISA.

Start with your employer and/or plan 

If you find an error or have a question, in most cases, you can start by looking for 

information in your Summary Plan Description. In addition, you can contact your employer 

and/or the plan administrator and ask them to explain what has happened and/or make 

a correction. 

Is it possible to sue under

Yes, you have a right to sue your plan and its fiduciaries to enforce or clarify your 

rights under ERISA and your plan in the following situations:

To appeal a denied claim for benefits after exhausting your plan’s claims review 

process; 

To recover benefits due you; 

To clarify your right to future benefits;

To obtain plan documents that you previously requested in writing but did 

not receive;

To address a breach of a plan fiduciary’s duties; or

To stop the plan from continuing any act or practice that violates the terms of 

the plan or ERISA. 

What is the role of the Labor D

The U.S. Department of Labor’s Employee Benefits Security Administration (EBSA) is 

the agency responsible for enforcing the provisions of ERISA that govern the conduct of 

plan fiduciaries, the investment and protection of plan assets, the reporting and disclosure 

of plan information, and participants’ benefit rights and responsibilities. 

However, not all retirement plans are covered by ERISA. For example, Federal, state, 

or local government plans and some church plans are not covered.

33
The Department of Labor enforces the law by informally resolving benefit disputes, 

conducting investigations, and seeking correction of violations of the law, including bringing 

lawsuits when necessary. 

The Department has benefits advisors committed to providing individual assistance 

to participants and beneficiaries. Participants will receive information on their rights and 

responsibilities under the law and help in obtaining benefits to which they are entitled. 

Contact a benefits advisor electronically at askebsa.dol.gov or by calling toll free 1-866-

444-3272. 

Action 

Contact the Department of Labor’s EBSA for questions about ERISA, help in obtaining a 

benefit, or:

If you believe your claim to benefits has been unjustly denied or that your benefit 

was calculated incorrectly;

If you have information that plan assets are being mismanaged or misused; 

If you think the plan fiduciaries are acting improperly; or

If you think your employer has been late in depositing your contributions (see 

Chapter 7).

What other Federal agencies can assist participants and 

The Pension Benefit Guaranty Corporation (PBGC) is a federally created corporation that 

guarantees payment of certain pension benefits under most private defined benefit plans when 

they are terminated with insufficient money to pay benefits. 

You may contact the PBGC at:

Pension Benefit Guaranty Corporation

PO Box 151750

Alexandria, VA 22315-1750

Toll-free number: 1-800-400-7242

mypension@pbgc.gov

The Treasury Department’s Internal Revenue Service is responsible for the rules that allow 

tax benefits for both employees and employers related to retirement plans, including vesting 

and distribution requirements.  

34
Glossa

401(k) Plan– In this type of defined contribution plan, the employee can make contributions 

from his or her paycheck before taxes are taken out. The contributions go into a 401(k) 

account, with the employee often choosing the investments based on options provided 

under the plan. In some plans, the employer also makes contributions, matching the 

employee’s contributions up to a certain percentage. SIMPLE and safe harbor 401(k) plans 

have additional employer contribution and vesting requirements. 

Automatic Enrollment – Employers can automatically enroll employees in a plan, such as a 

401(k) or SIMPLE IRA plan, and place contributions deducted from employees’ paychecks into 

certain predetermined investments, unless the employees decide otherwise. Participants 

have the opportunity to opt out of participation and periodic opportunities to change 

their investments (or in a SIMPLE IRA, the financial institution where the contributions are 

invested).

Benefit Accrual – The amount of benefits accumulated under the plan. 

Cash Balance Plan – A type of defined benefit plan that includes some elements that are 

similar to a defined contribution plan because the benefit amount is computed based on a 

formula using contribution and earning credits, and each participant has a hypothetical 

account. Cash balance plans are more likely than traditional defined benefit plans to make 

lump sum distributions. (For more information, see “Cash Balance Pension Plans: Questions 

and Answers” on the Department of Labor’s Website, at dol.gov/sites/default/files/ebsa/

about-ebsa/our-activities/resource-center/faqs/cash-balance-pension-plans-consumer.pdf.)

Defined Benefit Plan – This type of plan, also known as the traditional pension plan, 

promises the participant a specified monthly benefit at retirement. Often, the benefit is 

based on factors such as your salary, your age, and the number of years you worked for the 

employer. 

Defined Contribution Plan – In a defined contribution plan, the employee and/or the 

employer contribute to the employee’s individual account under the plan. The employee 

often decides how his or her account is invested. The amount in the account at distribution 

includes the contributions and investment gains or losses, minus any investment and 

administrative fees. The contributions and earnings are not taxed until distribution. The 

value of the account will change based on the value and performance of the investments. 

Employee Retirement Income Security Act of 1974 (ERISA) – A Federal law that sets 

standards of protection for individuals in most voluntarily established, private-sector 

retirement plans. ERISA requires plans to provide participants with plan information, 

including important facts about plan features and funding; sets minimum standards for 

participation, vesting, benefit accrual, and funding; provides fiduciary responsibilities for 

those who manage and control plan assets; requires plans to establish a claims and appeals 

process for participants to get benefits from their plans; gives participants the right to sue 

for benefits and breaches of fiduciary duty; and, if a defined benefit plan is terminated, 

guarantees payment of certain benefits through a Federally chartered corporation, known 

as the Pension Benefit Guaranty Corporation (PBGC). 

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Employee Stock Ownership Plan (ESOP) – A type of defined contribution plan that is invested 

primarily in employer stock.

Individual Benefit Statement – An individual benefit statement provides information about 

a participant’s retirement benefits, such as the total plan benefits earned and vested benefits, 

on a periodic basis. Additional information may be included depending upon the type of plan, 

such as how a participant’s 401(k) plan account is invested and the value of those investments. 

Individual Retirement Account (IRA) – An individual account set up with a financial institution, 

such as a bank or a mutual fund company. Under Federal law, individuals may set aside personal 

savings up to a certain amount, and the investments grow, tax deferred. In addition, defined 

contribution plan participants can transfer money from an employer retirement plan to an IRA 

when leaving an employer. IRAs also can be part of an employer plan.

Money Purchase Plan – A money purchase plan requires set annual contributions from the 

employer to individual accounts and is subject to other rules.

Multiemployer Plan – A retirement plan sponsored by several employers under collective 

bargaining agreements that meets certain other requirements. A participant who changes jobs 

from one sponsoring employer to another stays within the same plan.

Plan Administrator – The person who is identified in the plan document as having responsibility 

for running the plan. It could be the employer, a committee of employees, a company executive, 

or someone hired for that purpose.

Plan Document – A written instrument under which the plan is established and operated. 

Plan Fiduciary – Anyone who exercises discretionary authority or discretionary control over 

management or administration of the plan, exercises any authority or control over management 

or disposition of plan assets, or gives investment advice for a fee or other compensation with 

respect to assets of the plan.

Plan Trustee – Someone who has the exclusive authority and discretion to manage and control 

the assets of the plan. The trustee can be subject to the direction of a named fiduciary and the 

named fiduciary can appoint one or more investment managers for the plan’s assets. 

Plan Year – A 12-month period designated by a retirement plan for calculating vesting and 

distribution, among other things. The plan year can be the calendar year or an alternative 

period, e.g., July 1 to June 30.

Profit Sharing Plan – A profit sharing plan allows the employer each year to determine how 

much to contribute to the plan (out of profits or otherwise) in cash or employer stock. The plan 

contains a formula for allocating the annual contribution among the participants. 

36
Rollover – A rollover occurs when a participant leaves an employer and directs the defined 

contribution plan to transfer the money in his or her account to a new plan or individual 

retirement account. This preserves the benefits and does not trigger any tax consequences if 

done in a timely manner. 

Safe Harbor 401(k) – A safe harbor 401(k) is similar to a traditional 401(k) plan, but the 

employer is required to make contributions for each employee. The employer contributions 

in safe harbor 401(k) plans are immediately 100 percent vested. The safe harbor 401(k) eases 

administrative burdens on employers by eliminating some of the complex tax rules ordinarily 

applied to traditional 401(k) plans. 

Savings Incentive Match Plan for Employees of Small Employers (SIMPLE) – A plan in which 

a small business with 100 or fewer employees can offer retirement benefits through employee 

salary reductions and matching contributions (similar to those found in a 401(k) plan). It can be 

either a SIMPLE IRA or a SIMPLE 401(k). SIMPLE IRA plans impose few administrative burdens 

on employers because IRAs are owned by the employees and the bank or financial institution 

receiving the funds does most of the paperwork. While each has some different features, 

including contribution limits and the availability of loans, required employer contributions are 

immediately 100 percent vested in both. 

Simplified Employee Pension Plan (SEP) – A plan in which the employer makes contributions 

on a tax-favored basis to individual retirement accounts (IRAs) owned by the employees. 

If certain conditions are met, the employer is not subject to the reporting and disclosure 

requirements of most retirement plans. Under a SEP, an IRA is set up by or for an employee to 

accept the employer’s contributions. 

Summary Plan Description – A document provided by the plan administrator that includes 

a plain language description of important features of the plan, e.g., when employees begin to 

participate in the plan, how service and benefits are calculated, when benefits become vested, 

when payment is received and in what form, and how to file a claim for benefits. Participants 

must be informed of material changes either through a revised Summary Plan Description or 

in a separate document called a Summary of Material Modifications.

Vested Benefits – Those benefits that the individual has earned a right to receive and that 

cannot be forfeited. 

Years of Service – The time an individual has worked in a job covered by the plan. It is used 

to determine when an individual can participate and vest and how they can accrue benefits in 

the plan.

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EMPLOYEE BENEFITS SECURITY ADMINISTRATION

UNITED STATES DEPARTMENT OF LABOR

September 2017