EBSA Guidance on Annual Funding Notices … Better Later than Never | Morris, Manning & Martin, LLP
On April 3rd, the Employee Benefits Security Administration (EBSA) released FAB 2025-02 and related model notices to provide some guidance for the 2024 plan year annual funding notices (AFNs). See Field Assistance Bulletin No. 2025-02 | U.S. Department of Labor. The EBSA is requiring that plan administrators must consider the new guidance when evaluating that the AFNs for 2024 are consistent with a reasonable, good faith interpretation of the new notice requirements provided in Section 343 of SECURE 2.0. The EBSA’s timing could have been better… either issuing the guidance two days earlier, or having the new guidance apply for 2025.
That being said, there is good news. The FAB does clarify some of the common questions that plan administrators had about the new AFN requirements, and those approaches are consistent with how many plan administrators have updated their notices. Some points on the guidance and model notice include:
- The EBSA updated the formatting of the notice to move contact information up front and uses bullet points so that the notice is easier to read. It is still really long, though.
- The FAB addresses that reasonable estimates can be used for the participant counts in the notice year (Q&A 8), clarifies how to calculate the average rate of return on plan assets (Q&A 9), and clarifies that the standard for disclosing material events has not changed (Q&A 11).
So, while plan administrators should review their 2024 AFN for the new guidance, they may be pleasantly surprised. Of course, for 2025, plan administrators will want to consider updating the notice to reflect the new model notice language and format.
