You’ve got questions about the 401k Summary Annual Report (SAR). We’ve got answers. Better yet, we know how annoying it is to skip from article to article trying to find what you need - so we put it all here.

In this short article, you’ve got everything you need to know about your 401k Summary Annual Report. That includes:

Let’s get started with what exactly and SAR is.

What Is the 401k Summary Annual Report?

Quick definition: the Summary Annual Report (SAR) is a one-page summary of Form 5500 and the plan’s finances that gets distributed to a plan’s participants.

The SAR gets its name from the Form 5500, often called the Annual Report. Almost all of the information in your SAR will come from this notorious plan document.

Like the Form 5500, the SAR and it’s prompt distribution are mandated by the Employee Retirement Income Security Act of 1974 (ERISA), and failure to comply has consequences. Consequences which we’ll get into directly below.

Why Getting the SAR Right is So Important

A couple of reasons.

First off, the SAR, like Form 5500, is required by ERISA. Under this act, plan participants must be kept informed of important plan details - exactly the point of the SAR. The Department of Labor (DoL) and Internal Revenue Service (IRS) take exception to missing SARs. Failing to distribute the SAR (when you know you must), is punishable by a fine of up to $5,000 for individuals, $100,000 for companies, or imprisonment for up to a year.

Not good.

On top of that, you have to furnish a copy of the SAR upon an employee’s request. If a plan participant doesn’t get the requested SAR within 30 days, they’re entitled to up to $110/day (until they get the SAR) .

Also not great. So pay attention to SAR distribution. Which we’ll go over right now:

SAR Distribution Rules and Requirements

The 401k Summary Annual Report isn’t actually all that complicated, but getting distribution right is probably one of the most important things about the SAR. With that in mind, here are distribution due dates, responsibilities, and methods:

SAR Due Dates:

The SAR must be distributed to plan participants no later than 9 months after the end of the plan year. That’s two months after Form 5500 is due. If you’re on a calendar plan year, that’s September 30th.

Filed a 5500 extension? Good news! You’ve got two months after that date to distribute the SAR.

Who is responsible for sending this?

The plan administrator is responsible for distributing the SAR to plan participants. It’s also the plan admin’s job to furnish requested SARs (remember the potential fees if it goes undistributed after a request).

Possible SAR Distribution Methods:

You have a variety of options for distributing the SAR:
● Handing the SAR out on-site.
● Including the SAR in the employee’s annual statement.
● Including the SAR in a company-wide publication or newsletter.
● Mailing the SAR to employee’s residences.
● Emailing or otherwise sending electronically.
○ Caveat: participants have to have opted-in to electronic distribution, and they still have the right to request a paper copy at any time. Remember the fine if one is not furnished after 30 days.
Now that we’ve got distribution down, here’s what actually has to be in the SAR:

What's Included in the 401k Summary Annual Report?

Fortunately, when it comes down to it, the SAR is a relatively simple document, and simply quickly summarizes the important information from your Form 5500, and reminds participants of their rights.

Here are the basics of what the SAR is required to disclose:

  • Basic plan financial information
  • Plan expenses (including administrative)
  • Value of plan assets
  • Employer and employee contribution amounts
  • Participant’s rights to information
  • Funding standards and compliance
  • Right to receive a copy of Form 5500 or the SAR

That’s it! Just a few sections on one, relatively simple document. That’s the point of the SAR after all, to get the important benefit or pension plan information to participants without drowning them in papers.

Retirement Plan Summary Annual Report Template

As nice as bullet points are, sometimes an example is the most helpful thing. Here’s a sample of a typical 401k Summary Annual Report for a retirement plan. Use this to check your own SAR for mistakes or omissions, or just as a basic template:

Not all 401k Summary Annual Reports will look like this. Depending on the type of benefit or pension plan offered, the SAR will contain different information. Check to make sure that all benefits offered are represented when this is distributed to plan participants.

Conclusion

Luckily for anyone who has had to deal with Form 5500, the summarized version of it is significantly less to deal with. In fact, in this short post, we’ve given you everything you need to know to tackle this document, get it in on time, and avoid costly fees or penalties.

Plus, there’s always the template if you need a quick and accurate reference document.

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