Have you distributed your ESOP Summary Annual Report?

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It won’t be long and September 30, 2012 will be here.  One important ERISA requirement for ESOPs with a calendar year plan year is to distribute the ESOP Summary Annual Report (SAR) by this date if you filed the IRS Form 5500 by July 31, 2012.

The SAR is a summary of the information filed on the IRS Form 5500 and should be able to fit on one side of a sheet of paper.  The Department of Labor (DOL) has provided samples of the SAR, which can be found at DOL Reg.§2520.l04b-10(d)(3), that can be used for qualified pension plans, including ESOPs.

As indicated above, the SAR must be distributed within nine months after the close of the plan year.  If an extension has been filed to delay the due date for the Form 5500, the SAR is then due within 2 months after the close of the period for which the extension was granted - DOL Reg.§2520.l04b-10(c)(2).

Delivery of SAR

As noted in DOL Reg. §2520.104b-1(b), the SAR can be distributed via:

• in-hand delivery to an employee at his or her worksite

• a special insert in a periodical distributed to employees such as a union newspaper or a company publication if the distribution list for the periodical is comprehensive and up-to-date and a prominent notice on the front page of the periodical advises readers that the issue contains an insert with important information about rights under the plan and the Act which should be read and retained for future reference.

• first, second, or third-class mail. However, distribution by second or third-class mail is acceptable only if return and forwarding postage is guaranteed and address correction is requested. Any material sent by second or third-class mail which is returned with an address correction shall be sent again by first-class mail or personally delivered to the participant at his or her worksite.

The SAR can also be delivered via electronic media, but certain requirements must be met in order for this delivery method to meet the DOL requirements.  The electronic media requirements can be found in DOL Reg. §2520.104b-1(c).