The Pension Protection Act of 2006 (PPA) directs the Treasury Department to provide a model notice of a written notice to inform participants of their right to diversify out of employer stock. The model notice is not expected to be available until early 2007.
The fact that the model notice will not be issued before December 1, 2006, will not excuse a plan with a calendar year beginning on January 1, 2007, that offers publicly traded employer securities from providing the notice. A copy of the notice should be given also to newly eligible participants on their date of hire, or 30 days before becoming eligible to participate, whichever is date is earlier. The failure to provide the notice can result in penalties of up to $100 a day per participant from the date of noncompliance.
Plan sponsors must determine how to put diversification policies and procedures in place by January 1, 2007.
For plans with a calendar year beginning on or after January 1, 2007, the deadline for implementing the right to diversify relates to (1) participants with employee contributions invested in employer stock, and (2) participants who reached age 55 and who completed at least three years of service before the plan year beginning on or after January 1, 2006, with employer contributions invested in employer stock.
.jpg)
Comment Preview