On April 3, 2025, the Department of Labor (DOL) issued guidance on the Annual Funding Notice changes made by the SECURE Act 2.0 and provided model notices. Pension plan administrators should review and revise their annual funding notices in light of the new guidance.
Background
Section 343 of SECURE Act 2.0, passed December 29, 2022, implemented changes to the annual funding notice provided to defined benefit pension plan participants. The changes became effective for plan years beginning after December 31, 2023. For calendar year pension plans, the 2024 Annual Funding Notice (due no later than April 30, 2025) would be the first notice implementing the new rules. The DOL had not issued guidance or provided a model notice until the afternoon of April 3, 2025.
Annual Funding Notice Guidance
Field Assistance Bulletin No. 2025-02 provides a Q&A format covering some of the changes made by SECURE Act 2.0 and provides a model notice for single-employer plans and multiemployer plans. A few initial observations:
- New Model Format. The new model funding notice has a different format than the prior model notice issued in 2015. The DOL completely overhauled the format of the model notice and did not simply incorporate the new requirements into the existing model. Plan administrators cannot rely on the prior model notice because it no longer complies with the requirements of SECURE Act 2.0.
- Already Sent. The DOL acknowledges that some plan sponsors may have already sent or finalized their Annual Funding Notice. The DOL expects those plan administrators to review the annual funding notice in light of the new guidance and potentially correct the Annual Funding Notice if it does not meet the standards provided by the guidance.
- Estimated Participant Count. The DOL affirms that participant data must be as of the last day of the plan year. Large plan administrators are permitted to make reasonable, good faith estimates with respect to the most recently concluded year. The guidance does not specify what constitutes a large plan, but for purposes of the Form 5500 annual report a “large plan” is any plan with 100 or more participants.
- Average Return on Assets. The DOL provided two methods to calculate the pension plan’s “average return on assets” but acknowledged that other methods may fulfill the requirement.
