[Federal Register Volume 73, Number 197 (Thursday, October 9, 2008)]
[Proposed Rules]
[Pages 59575-59579]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E8-23918]


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DEPARTMENT OF THE TREASURY

Internal Revenue Service

26 CFR Part 1

[REG-107318-08]
RIN 1545-BH75


Notice to Participants of Consequences of Failing To Defer 
Receipt of Qualified Retirement Plan Distributions; Expansion of 
Applicable Election Period and Period for Notices

AGENCY: Internal Revenue Service (IRS), Treasury.

ACTION: Notice of proposed rulemaking and notice of public hearing.

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SUMMARY: This document contains proposed regulations under sections 
402(f), 411(a)(11), and 417 of the Internal Revenue Code (Code). The 
proposed regulations would provide that the notice required under 
section 411(a)(11) to be provided to a participant of his or her right, 
if any, to defer receipt of an immediately distributable benefit must 
also describe the consequences of failing to defer receipt of the 
distribution. The proposed regulations would also provide that the 
applicable election period for waiving the qualified joint and survivor 
annuity form of benefit under section 417 is the 180-day period ending 
on the annuity starting date, and that a notice required to be provided 
under section 402(f), section 411(a)(11), or section 417 may be 
provided to a participant as much as 180 days before the annuity 
starting date (or, for a notice under section 402(f), the distribution 
date). These regulations would affect administrators of, employers 
maintaining, participants in, and beneficiaries of tax-favored 
retirement plans.

DATES: Written or electronic comments and requests to speak at the 
public hearing must be received by January 7, 2009.

ADDRESSES: Send submissions to: CC:PA:LPD:PR (REG-107318-08), room 
5203, Internal Revenue Service, PO Box 7604, Ben Franklin Station, 
Washington DC 20044. Submissions may be hand-delivered Monday through 
Friday between the hours of 8 a.m. and 4 p.m. to: CC:PA:LPD:PR (REG-
107318-08), Courier's Desk, Internal Revenue Service, 1111 Constitution 
Avenue, NW., Washington, DC, or sent electronically via the Federal 
eRulemaking Portal at http://www.regulations.gov (IRS REG-107318-08).

FOR FURTHER INFORMATION CONTACT: Concerning the regulations, Michael P. 
Brewer at (202) 622-6090; concerning submission of comments or to 
request to speak at the public hearing, Funmi Taylor at (202) 622-7180 
(not toll-free numbers).

SUPPLEMENTARY INFORMATION: 

Paperwork Reduction Act

    The collection of information contained in this notice of proposed 
rulemaking has been submitted to the Office of Management and Budget 
for review in accordance with the Paperwork Reduction Act of 1995 (44 
U.S.C. 3507(d)). Comments on the collection of information should be 
sent to the Office of Management and Budget, Attn: Desk Officer for the 
Department of the Treasury, Office of Information and Regulatory 
Affairs, Washington, DC 20503, with copies to the Internal Revenue 
Service, Attn: IRS Reports Clearance Officer, SE:W:CAR:MP:T:T:SP; 
Washington, DC 20224. Comments on the collection of information should 
be received by December 8, 2008. Comments are specifically requested 
concerning:
    Whether the proposed collection of information is necessary for the 
proper performance of the functions of the Internal Revenue Service, 
including whether the information will have practical utility;
    The accuracy of the estimated burden associated with the proposed 
collection of information;
    How the quality, utility, and clarity of the information to be 
collected may be enhanced;
    How the burden of complying with the proposed collections of 
information may be minimized, including through the application of 
automated collection techniques or other forms of information 
technology; and
    Estimates of capital or start-up costs and costs of operation, 
maintenance, and purchase of service to provide information.
    The collection of information in these proposed regulations is in 
Sec.  1.411(a)-11(c)(2) of the Income Tax Regulations. This collection 
of information is required to comply with the statutory

[[Page 59576]]

notice requirements of section 411(a), and is expected to be included 
in the notices currently provided to employees that inform them of 
their rights and benefits under the plan. The likely recordkeepers are 
businesses or other for-profit institutions and nonprofit institutions 
and organizations.
    Estimated total annual recordkeeping burden: 100,000 hours.
    Estimated average annual burden hours per recordkeeper: 1 hour.
    Estimated number of recordkeepers: 100,000.
    An agency may not conduct or sponsor, and a person is not required 
to respond to, a collection of information unless it displays a valid 
control number assigned by the Office of Management and Budget.
    Books or records relating to a collection of information must be 
retained as long as their contents may become material in the 
administration of any internal revenue law. Generally, tax returns and 
tax return information are confidential, as required by 26 U.S.C. 6103.

Background

A. Notice of Consequences of Failing To Defer

    Section 411(a)(11)(A) provides that, if the present value of any 
nonforfeitable accrued benefit exceeds $5,000, a qualified plan must 
provide that such benefit may not be immediately distributed without 
the consent of the participant. Similarly, section 203(e) of the 
Employee Retirement Income Security Act of 1974, as amended (ERISA), 
provides that if the present value of any nonforfeitable accrued 
benefit with respect to a participant in a plan exceeds $5,000, the 
benefit may not be immediately distributed without the consent of the 
participant.
    Section 1102(b)(1) of the Pension Protection Act of 2006 (PPA '06), 
109 Public Law 280, 120 Stat. 780, instructs the Secretary of the 
Treasury to modify the regulations under section 411(a)(11) of the Code 
``to provide that the description of a participant's right, if any, to 
defer receipt of a distribution shall also describe the consequences of 
failing to defer such receipt.'' Section 1102(b)(2)(A) of PPA '06 
provides that the modifications required by section 1102(b)(1) of PPA 
'06 shall apply to years beginning after December 31, 2006. Section 
1102(b)(2)(B) of PPA '06, however, states that a plan shall not be 
treated as failing to meet the requirements of section 411(a)(11) with 
respect to any description of the consequences of failing to defer 
provided ``within 90 days after the Secretary of the Treasury issues 
the modifications required by [section 1102(b)(1) of PPA '06] if the 
plan administrator makes a reasonable attempt to comply with such 
requirements.''
    Section 1.411(a)-11(c)(2)(i) states that, in order for a plan to 
obtain valid consent under section 411(a)(11), ``so long as a benefit 
is immediately distributable, a participant must be informed of the 
right, if any, to defer receipt of the distribution.'' Section 
1.411(a)-11(c)(4) states that a distribution is immediately 
distributable prior to the later of the time a participant has attained 
normal retirement age or age 62.
    Q&A-32 of Notice 2007-7, 2007-5 I.R.B. 395, provides that a plan 
administrator is required to revise the notice required under section 
411 to reflect the modifications made by section 1102(b) of PPA '06 for 
notices provided in plan years beginning after December 31, 2006. 
Notice 2007-7 further provides that, pursuant to section 1102(b)(2)(B) 
of PPA '06, a plan will not be treated as failing to meet the new 
requirements of section 1102(b) of PPA '06 if the plan administrator 
makes a reasonable attempt to comply with the new requirements with 
respect to a notice that is provided prior to the 90th day after the 
issuance of regulations reflecting the modifications required by such 
section 1102(b) of PPA '06. See Sec.  601.601(b)(2)(ii)(b).
    Q&A-33 of Notice 2007-7 includes a safe harbor that would be 
considered a reasonable attempt to comply with the requirement in 
section 1102(b)(1) of PPA '06 that a description of a participant's 
right to defer receipt of a distribution include a description of the 
consequences of failing to defer. In particular, Q&A-33 provides that a 
description that is written in a manner reasonably calculated to be 
understood by the average participant and that includes the following 
information is a reasonable attempt to comply with the requirements of 
section 1102(b)(2)(B) of PPA '06: (a) In the case of a defined benefit 
plan, a description of how much larger benefits will be if the 
commencement of distributions is deferred; (b) in the case of a defined 
contribution plan, a description indicating the investment options 
available under the plan (including fees) that will be available if 
distributions are deferred; and (c) the portion of the summary plan 
description that contains any special rules that might materially 
affect a participant's decision to defer. For purposes of clause (a), a 
plan administrator can use a description that includes the financial 
effect of deferring distributions, as described in Sec.  1.417(a)(3)-
1(d)(2)(i), based solely on the normal form of benefit.
    Q&A-31 of Notice 2007-7 provides that the provisions of section 
1102 apply to plan years that begin after December 31, 2006. Q&A-31 
explains that this means that the new rules relating to the content of 
the notices apply only to notices issued in those plan years, without 
regard to the annuity starting date for the distributions.

B. Expansion of Applicable Election Period

    Section 401(a)(11)(A)(i) provides that, except as provided in 
section 417, a plan that is qualified under section 401(a) must provide 
the accrued benefit payable to a vested participant who does not die 
before the annuity starting date in the form of a qualified joint and 
survivor annuity.
    Section 417(a)(1)(A) provides that, in general, a plan satisfies 
section 401(a)(11) only if each participant may elect at any time 
during the ``applicable election period'' to waive the qualified joint 
and survivor annuity form of benefit (and to revoke the waiver), and 
certain other requirements are satisfied. Before PPA '06, section 
417(a)(6)(A) provided that the ``applicable election period'' for a 
participant to waive the qualified joint and survivor annuity form of 
distribution was the 90-day period ending on the annuity starting date.
    Section 1102(a)(1)(A) of PPA '06 amended section 417(a)(6)(A) by 
changing the 90-day ``applicable election period'' for electing a 
distribution subject to the qualified joint and survivor annuity (QJSA) 
rules of sections 401(a)(11) and 417 in a form other than a QJSA to a 
180-day applicable election period. Section 1102(a)(2)(A) of PPA '06 
made a parallel amendment to section 205(c)(7)(A) of ERISA by striking 
``90-day'' and inserting ``180-day''.
    Sections 1102(a)(1)(B) and 1102(a)(2)(B) of PPA '06 provide that 
the Secretary of the Treasury shall modify the regulations relating to 
section 417 of the Code and section 205 of ERISA by substituting ``180 
days'' for ``90 days'' each place it appears.
    Section 1102(a)(3) of PPA '06 provides that the amendments to the 
applicable election period apply to years beginning after December 31, 
2006.

C. Expansion of Period for Notices

    Section 417(a)(3)(A) of the Code and section 205(c)(3)(A) of ERISA 
provide that a plan must provide to each

[[Page 59577]]

participant, ``within a reasonable period of time before the annuity 
starting date'' and consistent with such regulations as the Secretary 
of the Treasury may prescribe, a written explanation that describes the 
terms and conditions of the qualified joint and survivor annuity and 
certain other information. Similarly, section 402(f)(1) provides that a 
plan administrator must, ``within a reasonable period of time'' before 
making an eligible rollover distribution, provide to recipients an 
explanation of certain tax consequences of the distribution.
    Section 1102(a)(1)(B) of PPA '06 provides that the Secretary of the 
Treasury shall modify the regulations under sections 402(f), 
411(a)(11), and 417 by substituting ``180 days'' for ``90 days'' each 
place it appears in Sec. Sec.  1.402(f)-1, 1.411(a)-11(c), and 
1.417(e)-1(b). Similarly, section 1102(a)(2)(B) of PPA '06 provides 
that the Secretary of the Treasury shall modify the regulations 
relating to sections 203(e) and 205 of ERISA by substituting ``180 
days'' for ``90 days'' each place it appears.
    Section 1102(a)(3) provides that the amendments to the notice 
periods apply to years beginning after December 31, 2006. Q&A-31 of 
Notice 2007-7 explains that the 180-day period for distributing notices 
applies to notices distributed in a plan year that begins after 
December 31, 2006.

D. Requirements under ERISA

    ERISA section 203(e) is the parallel provision to section 
411(a)(11) of the Code and ERISA section 205 is the ERISA parallel to 
section 417 of the Code. Pursuant to section 101 of Reorganization Plan 
No. 4 of 1978, 29 U.S.C. 1001nt (the Reorganization Plan), the 
Secretary of the Treasury generally has authority to issue regulations 
under parts 2 and 3 of subtitle B of title I of ERISA, including 
sections 203(e) and 205 of ERISA. Thus, the changes required by section 
1102 of PPA '06 would apply as well for purposes of ERISA sections 
203(e) and 205.

Explanation of Provisions

A. Notice of Consequences of Failing To Defer

    These proposed regulations would provide that the notice required 
by section 411(a)(11) advising a participant of the right, if any, to 
defer receipt of a distribution must also inform the participant of the 
consequences of failing to defer such receipt. The proposed regulations 
would also provide guidance on the relevant information that must be 
provided to a participant in order to satisfy the requirement that the 
participant be notified of the consequences of failing to defer.
    Specifically, these proposed regulations would require that the 
participant be provided a description of specified federal tax 
implications of failing to defer and, in the case of a defined benefit 
plan, a statement of the amount payable to the participant under the 
normal form of benefit both upon immediate commencement and when the 
benefit is no longer immediately distributable (that is, the later of 
age 62 or attainment of normal retirement age). Section 1.417(a)(3)-
1(c)(2)(ii) permits a plan to provide participants with a QJSA 
explanation, which does not vary based on the participant's marital 
status, of the relative value of optional forms of benefit compared to 
the value of a QJSA. These proposed regulations would permit the 
statement of the amount payable to not be based on the participant's 
marital status, to the extent the plan is permitted under Sec.  
1.417(a)(3)-1(c)(2)(ii) to use a QJSA explanation that does not vary 
based on whether the participant is married or unmarried.
    The proposed regulations would also require the information in the 
notice to include, in the case of a defined contribution plan, a 
statement that some currently available investment options in the plan 
may not be generally available on similar terms outside the plan and 
contact information for obtaining additional information on the general 
availability outside the plan of currently available investment options 
in the plan. In addition, the proposed regulations would require the 
notice to include, in the case of a defined contribution plan, a 
statement that fees and expenses (including administrative or 
investment-related fees) outside the plan may be different from fees 
and expenses that apply to the participant's account and contact 
information for obtaining information on such fees.
    The proposed regulations also include an additional category of 
information that must be provided relating to any provisions of the 
plan (and provisions of any accident or health plan maintained by the 
employer) that could reasonably be expected to materially affect a 
participant's decision whether to defer receipt of the distribution. 
Thus, for example, the proposed regulations would require a description 
of the eligibility requirements for retiree health benefits if such 
benefits are limited to participants who have an undistributed benefit 
under the employer's retirement plan.
    In general, the proposed regulations would also provide that the 
required information regarding the consequences of a participant's 
failing to defer receipt of a distribution must appear together. 
However, the proposed regulations would permit a cross-reference to 
where the required information may be found in notices or other 
information provided or made available to the participant, as long as 
the notice of consequences of failing to defer includes a statement of 
how the referenced information may be obtained without charge and 
explains why the referenced information is relevant to a decision 
whether to defer.

B. Expansion of Applicable Election Period and Period for Notices

    Consistent with sections 1102(a)(1)(A) and (1)(B) and 1102(a)(2)(A) 
and (2)(B) of PPA '06, the proposed regulations would both (1) expand 
the definition of applicable election period to up to 180 days, and (2) 
expand the time period for notices issued under sections 402(f), 
411(a)(11), and 417 to allow the notices to be issued up to 180 days 
prior to the annuity starting date (or, in the case of a notice under 
section 402(f), the date of distribution). Specifically, the proposed 
regulations would substitute ``180 days'' for ``90 days'' and ``180-
day'' for ``90-day'' each place those terms appear in Sec.  1.401(a)-
13(g)(4)(ii), Sec.  1.401(a)-20, A-3(b)(1), A-4, A-10(a), A-16, and A-
24(a)(1), Sec.  1.402(f)-1, Sec.  1.411(a)-11(c), and Sec.  1.417(e)-
1(b).
    Pursuant to section 101 of the Reorganization Plan, the Secretary 
of Treasury has the authority to issue regulations under ERISA sections 
203(e) and 205. Thus, these proposed regulations that apply to sections 
402(f), 411(a)(11), and 417 of the Code would apply as well for 
purposes of sections 203(e) and 205 of ERISA.

Proposed Effective/Applicability Date

    These regulations are proposed to become effective for notices 
provided (and election periods beginning) on or after the first day of 
the first plan year beginning on or after January 1, 2010. However, in 
no event will the regulations become effective for notices provided 
(and election periods beginning) earlier than the first day of the 
first plan year beginning 90 days after publication of final 
regulations in the Federal Register.
    With respect to the regulations relating to the notice of 
consequences of failing to defer the receipt of distributions, until 
these regulations become effective, a plan will be treated as complying 
if: (1) The plan complies either with these proposed regulations or 
with Q&A-32 and Q&A-33 in Notice

[[Page 59578]]

2007-7; or (2) if the plan administrator makes a reasonable attempt to 
comply with the requirement that the description of a participant's 
right, if any, to defer receipt of a distribution shall also describe 
the consequences of failing to defer such receipt.
    With respect to the proposed regulations relating to the expanded 
applicable election period and the expanded period for notices, plans 
may rely on these proposed regulations for notices provided (and 
election periods beginning) during the period beginning on the first 
day of the first plan year beginning on or after January 1, 2007 and 
ending on the effective date of final regulations.

Special Analyses

    It has been determined that this notice of proposed rulemaking is 
not a significant regulatory action as defined in Executive Order 
12866. Therefore, a regulatory assessment is not required. It also has 
been determined that section 553(b) of the Administrative Procedure Act 
(5 U.S.C. chapter 5) does not apply to these regulations.
    It is hereby certified that the collection of information contained 
in this regulation will not have a significant economic impact on a 
substantial number of small entities. This certification is based on 
several factors, including that the regulation merely provides guidance 
to implement a statutorily-required notice, and that the incremental 
burden in the regulation would be minimal because it only requires 
including additional information in notices already provided by all of 
the affected entities. Accordingly, a Regulatory Flexibility Analysis 
under the Regulatory Flexibility Act (5 U.S.C. chapter 6) is not 
required. Pursuant to section 7805(f) of the Code, this notice of 
proposed rulemaking will be submitted to the Chief Counsel for Advocacy 
of the Small Business Administration for comment on its impact on small 
business.

Comments and Public Hearing

    Before these proposed regulations are adopted as final regulations, 
consideration will be given to any written (one signed and eight (8) 
copies) or electronic comments that are submitted timely to the IRS. 
All comments will be available for public inspection and copying.
    A public hearing has been scheduled for Friday, February 20, 2009, 
at 10 a.m. in the IRS Auditorium, Internal Revenue Building, 1111 
Constitution Avenue, NW., Washington, DC. Due to building security 
procedures, visitors must enter at the Constitution Avenue entrance. In 
addition, all visitors must present photo identification to enter the 
building. Because of access restrictions, visitors will not be admitted 
beyond the immediate entrance area more than 30 minutes before the 
hearing starts. For information about having your name placed on the 
building access list to attend the hearing, see the FOR FURTHER 
INFORMATION CONTACT section of this preamble.
    Persons who wish to present oral comments at the hearing must 
submit written or electronic comments by January 7, 2009 and submit an 
outline of the topics to be discussed and the amount of time to be 
devoted to each topic (a signed original and eight (8) copies) by 
January 16, 2009. A period of 10 minutes will be allotted to each 
person for making comments.
    An agenda showing the scheduling of the speakers will be prepared 
after the deadline for receiving outlines has passed. Copies of the 
agenda will be available free of charge at the hearing.

Drafting Information

    The principal author of these regulations is Michael P. Brewer, 
Office of Division Counsel/Associate Chief Counsel (Tax Exempt and 
Government Entities). However, other personnel from the Office of Chief 
Counsel, IRS, and the Department of the Treasury participated in the 
development of these regulations.

Proposed Amendments to the Regulations

    Accordingly, 26 CFR part 1 is proposed to be amended as follows:

PART 1--INCOME TAXES

    Paragraph 1. The authority citation for part 1 continues to read as 
follows:

    Authority: 26 U.S.C. 7805 * * *.


Sec.  1.401(a)-13; Sec.  1.401(a)-20; Sec.  1.402(f)-1; Sec.  1.411(a)-
11; Sec.  1.417(e)-1  [Amended]

    Par. 2. For each entry listed in the ``Location'' column, remove 
the language in the ``Remove'' column and add the language in the 
``Add'' column in its place.

------------------------------------------------------------------------
            Location                    Remove                Add
------------------------------------------------------------------------
1.401(a)-13(g)(4)(ii), first      90 days...........  180 days.
 sentence.
1.401(a)-20, A-4, third sentence  90 days...........  180 days.
1.401(a)-20, A-10(a), fifth and   90 days...........  180 days.
 sixth sentences.
1.401(a)-20, A-16, sixth          90 days...........  180 days.
 sentence.
1.401(a)-20, A-24(a)(1), fifth    90 days...........  180 days.
 sentence.
1.402(f)-1, A-2(a), first         90 days...........  180 days.
 sentence.
1.411(a)-11(c)(2)(ii)...........  90 days...........  180 days.
1.411(a)-11(c)(2)(iii)(A), first  90 days...........  180 days.
 sentence.
1.417(e)-1(b)(3)(i).............  90 days...........  180 days.
1.417(e)-1(b)(3)(ii), first       90 days...........  180 days.
 sentence.
1.417(e)-1(b)(3)(iii)...........  90 days...........  180 days.
1.417(e)-1(b)(3)(vi), second      90 days...........  180 days.
 sentence.
1.417(e)-1(b)(3)(vii)...........  90 days...........  180 days.
1.417(e)-1(b)(3)(vii)...........  90-day............  180-day.
------------------------------------------------------------------------

Sec.  1.411(a)-11  [Amended]

    Par. 3. Section 1.411(a)-11 is amended as follows:
    1. The second sentence of paragraph (c)(2)(i) is revised.
    2. The second sentence of paragraph (c)(2)(iii)(B)(3) is revised.
    3. Paragraphs (c)(2)(vi) and (h) are added.
    The additions and revisions read as follows:


Sec.  1.411(a)-11  Restriction and valuation of distributions.

* * * * *
    (c) * * *
    (2) Consent--(i) * * * In addition, so long as a benefit is 
immediately distributable, a participant must be informed of the right, 
if any, to defer receipt of the distribution and of the consequences of 
failing to defer such receipt. * * *
* * * * *
    (iii) * * *
    (B) * * *

[[Page 59579]]

    (3) * * * The summary described in paragraph (c)(2)(iii)(B)(2) of 
this section must advise the participant of the right, if any, to defer 
receipt of the distribution and of the consequences of failing to defer 
such receipt, must set forth a summary of the distribution options 
under the plan, must refer the participant to the most recent version 
of the notice (and, in the case of a notice provided in any document 
containing information in addition to the notice, must identify that 
document and must provide a reasonable indication of where the notice 
may be found in that document, such as by index reference or by section 
heading), and must advise the participant that, upon request, a copy of 
the notice will be provided without charge.
* * * * *
    (vi) Consequences of failing to defer--(A) A notice under this 
paragraph (c)(2) that is required to describe the consequences of 
failing to defer receipt of a distribution until it is no longer 
immediately distributable must, to the extent applicable under the plan 
and in a manner designed to be easily understood, provide the 
participant with the information set out in paragraphs (c)(2)(vi)(A)(1) 
through (5) of this section and explain why it is relevant to a 
decision whether to defer.
    (1) A description of the following federal tax implications of 
failing to defer: differences in the timing of inclusion in taxable 
income of an immediately commencing distribution that is not rolled 
over (or not eligible to be rolled over) and a distribution that is 
deferred until it is no longer immediately distributable (including, as 
applicable, differences in the taxation of distributions of designated 
Roth contributions within the meaning of section 402A); application of 
the 10% additional tax on certain distributions before age 59\1/2\ 
under section 72(t); and, in the case of a defined contribution plan, 
loss of the opportunity upon immediate commencement for future tax-
favored treatment of earnings if the distribution is not rolled over 
(or not eligible to be rolled over) to an eligible retirement plan 
described in section 402(c)(8)(B).
    (2) In the case of a defined benefit plan, a statement of the 
amount payable to the participant under the normal form of benefit both 
upon immediate commencement and upon commencement when the benefit is 
no longer immediately distributable (assuming no future benefit 
accruals). The statement need not vary based on the participant's 
marital status if the plan is permitted, pursuant to Sec.  1.417(a)(3)-
1(c)(2)(ii), to provide a QJSA explanation that does not vary based on 
the participant's marital status.
    (3) In the case of a defined contribution plan, a statement that 
some currently available investment options in the plan may not be 
generally available on similar terms outside the plan and contact 
information for obtaining additional information on the general 
availability outside the plan of currently available investment options 
in the plan.
    (4) In the case of a defined contribution plan, a statement that 
fees and expenses (including administrative or investment-related fees) 
outside the plan may be different from fees and expenses that apply to 
the participant's account and contact information for obtaining 
additional information on the fees and expenses that apply to the 
participant's account.
    (5) An explanation of any provisions of the plan (and provisions of 
an accident or health plan maintained by the employer) that could 
reasonably be expected to materially affect a participant's decision 
whether to defer receipt of the distribution. Such provisions would 
include, for example: plan terms under which a participant who fails to 
defer may lose eligibility for retiree health coverage or eligibility 
for early retirement subsidies or social security supplements; plan 
terms under which the benefit of a rehired participant who failed to 
defer may be adversely affected by the decision not to defer; and, in 
the case of a defined contribution plan, plan terms under which 
undistributed benefits that otherwise are nonforfeitable become 
forfeitable upon the participant's death.
    (B) Location of information; incorporation by reference. In 
general, the information required to be provided in a notice under this 
paragraph (c)(2)(vi) must appear together (for example, in a list of 
consequences of failing to defer). However, the notice will not be 
treated as failing to satisfy the requirements of this paragraph 
(c)(2)(vi) merely because the notice includes a cross-reference to 
where the required information may be found in notices or other 
information provided or made available to the participant, as long as 
the notice of consequences of failing to defer includes a statement of 
how the referenced information may be obtained without charge and 
explains why the referenced information is relevant to a decision 
whether to defer.
* * * * *
    (h) Consequences of Failing to Defer Effective/Applicability Date. 
The provisions in paragraph (c) of this section that describe the 
requirement to notify participants of the consequences of failing to 
defer are effective for notices provided on or after the first day of 
the first plan year beginning on or after January 1, 2010.

 Linda E. Stiff,
Deputy Commissioner for Services and Enforcement.
 [FR Doc. E8-23918 Filed 10-8-08; 8:45 am]
BILLING CODE 4830-01-P