As a plan sponsor, you play an important role in making sure participants get required plan notices. Keeping accurate contact information in your Gusto Roster helps us handle distribution — but when we cannot reach a participant, that responsibility falls to you. This article explains when notices are required, how electronic communications work, and what happens if notices are missed.
The Department of Labor (DOL) and the Internal Revenue Service (IRS) require certain documents, notices, and other disclosures to be shared with both active and dismissed participants when certain events occur.
It's important for plan sponsors to keep accurate contact details in their Gusto Roster so we can share these documents accordingly.
If we do not have accurate participant contact details, per our Terms of Service (page 20), we must rely on you as the plan sponsor to distribute the documents to any participants we are unable to contact.
Employees need to get initial and recurring notices when they become eligible to participate in the plan. Participants also need to be notified when a plan terminates or when sponsor or administrator information changes.
Employees who are no longer employed with the company but were eligible to participate during a given period, or who have open accounts in the plan, need to get notices in many cases as well.
Examples of the notices and disclosures we provide include:
Enrollment information
Automatic enrollment notice
Safe harbor notice
Amended summary plan description
Plan information
Beneficiary forms
Distribution information
Fee disclosure
Qualified Default Investment Alternative (QDIA) notice
404(c) notice
Plan termination notice
Fund menu changes
Summary of the plan's annual financial report
For participants who consent to getting electronic disclosures and have an accurate email address on file, we will furnish all required plan information and notices.
If an employee does not have an email account and access to a computer as part of their job, we require the sponsor to make sure a personal or company-issued email account is set up, along with computer and internet access.
If a plan sponsor cannot provide us with accurate contact information for an employee, or an employee has opted out of electronic communications, the responsibility to provide appropriate disclosures or notices will typically fall to the plan sponsor.
Note: When we get a "bounced back" email, both the IRS and DOL treat it as if the participant has opted out of electronic communications.
Copies of required notices will be posted in the Resource Library of your 401(k) sponsor dashboard so you can distribute them to the necessary participants. You may choose to distribute the notices by mail, email (if the participant has consented to use of their personal email), or any other means that will make sure the participant gets the information.
Important: If a notice is emailed, you need to always advise the employee that they may request a hard copy without charge. You need to provide that hard copy upon request.
If you are able to get updated information for a participant, you can add the contact details in your Gusto 401(k) Roster. This will help us directly distribute future notices to participants, rather than having you share the information.
If documents and notices are not distributed on time, penalties may accrue. Penalties vary based on the type of document or notice that was not distributed. For example, the cost of a tardy blackout notice can be as high as $100 per participant per day.
Make every effort to keep participant contact information up to date or to distribute the notices we provide to those without the necessary information.
Learn more about notice requirements and correcting plan operational errors on the IRS website.