Resources

DOL Releases New Annual Funding Notice Guidance

The Field Assistance Bulletin provides a few key takeaways:

1. Average return on assets: Under SECURE 2.0, AFNs must provide the plan’s “average return on assets” for the notice year. The Field Assistance Bulletin provides two possible methods of calculating this figure but also notes the other methods may be sufficient.

2. New metric: While prior AFNs disclosed a plan’s funding level using plan’s “funding target attainment percentage,” SECURE 2.0 requires a new metric— it requires that the AFN provide the plan’s “percentage of plan liabilities funded.” The Field Assistance Bulletin provides that plans may use reasonable estimates for the year-end metric for the notice year. This means, for example, that a plan may use reasonable estimates for the 2025 year-end liabilities in the 2025 AFN. However, estimates are not permitted for the metric for the prior two years— for these, the metric should match the figure disclosed on the corresponding Form 5500 for those years.

3. Demographic information: Under SECURE 2.0, AFNs must also include participant and beneficiary totals as of the last day of the notice year and the two prior years. The Field Assistance Bulletin clarified that, as with the new metric above, plans may use a reasonable estimate for the year-end figures of the notice year. For the prior two years, however, estimates are not permitted.

The best practice for plan sponsors will be to follow the model notices included in the Field Assistance Bulletin. Frustratingly, given the timing of the guidance’s release, the DOL provides that it will hold plans to this new requirement for the 2024 notice year. If an AFN has been sent out for 2024 that does not comply with the Field Assistance Bulletin, it is likely worth sending a new notice that meets all new requirements. Now is a great time to reach out to your TPA partner to make sure clients are set for good compliance practices, including confirming that they sent out notices that were compliant with the recent guidance for the 2024 AFNs.

Reminders
• May 15, 2025: Deadline for calendar-year 401(k) and other plans that permit participant investment direction to provide the quarterly fee disclosure and benefits statement.
• June 30, 2025: Deadline for calendar year plans with publicly traded employer securities to file their Form 11-K annual report.
• June 30, 2025: Deadline for corrective distributions to HCEs for failed ADP/ACP tests.


Hannah Munn, Partner, Poyner Spruill
Hannah’s practice is focused in the areas of Employee Benefits and Executive Compensation. She works with business owners and HR executives to understand and manage employee benefits and executive compensation arrangements. She routinely represents clients before the Internal Revenue Service, Department of Labor, and Pension Benefit Guarantee Corporation and has extensive experience in virtually all aspects of employee benefits.