§1032 Notice and Disclosure Requirements with Respect to Lump Sums

Summary

Requires pension plan administrators who add a short time window to let people take a lump-sum payment instead of future monthly checks to give clear advance notices. The plan must tell each person offered the lump sum at least 90 days before they can choose, and must tell the Secretary of Labor and the Pension Benefit Guaranty Corporation at least 30 days before the choice period starts. The notice to people must say what benefit choices are available (covers things like disability, retirement, and survivor payments), show the estimated monthly amount at normal retirement age and the lump sum, explain how the lump sum was figured (interest rate, life-expectancy assumptions, and any extra benefits included), compare the lump sum to the plan’s normal single-life and joint-and-survivor annuities, warn that buying a similar commercial annuity may cost more, list the risks and losses if someone takes the lump sum (like outliving savings, loss of PBGC protection and amount protected, creditor and spousal protections), give basic tax and rollover info and advise getting tax or legal advice, explain how to accept or reject the offer and any spouse consent rules, and give a contact for questions. Notices must be easy to understand and the Secretary will provide a model form. The notice to the Secretary and PBGC must say how many people are eligible, how long the offer lasts, how the lump sum was calculated, and include a sample of the participant notice. Within 90 days after the offer period ends the plan sponsor must report how many accepted and other required data. The Secretary will publish the notices and reports in a way that keeps private details confidential. The Secretary must also send Congress a summary report every two years, starting by the last day of the second calendar year after the calendar year that includes the date the SECURE 2.0 Act’s final rules take effect; each summary covers from the first day of the second calendar year before the report year through the last day of the calendar year before the report is due.