Plan sponsors can find it challenging to communicate information about a Company’s retirement plans. Even for those whose native language is English, it can be challenging to explain concepts like eligibility and plan entry, vesting and forfeiture. It helps to have a plan’s Summary Plan Description include examples that illustrate when and how employees become participants and when their benefits become vested.
The Importance of Language Access
When a significant portion of plan participants are literate in the same non-English language, providing SPDs, required notices, and participant statements in that language can enhance understanding and engagement.
Legal Requirements for Non-English Notices
While there is no legal requirement to provide SPDs in a foreign language, the Department of Labor mandates a non-English notice accompanying the English version of an SPD under certain conditions:
- A plan covers less than 100 participants at the beginning of a plan year and 25% or more of all plan participants are literate only in the same non-English language, or
- A plan covers 100 or more participants at the beginning of the plan year and the lesser of 500 or more participants or 10% or more of all plan participants are literate only in the same non-English language.
The notice explains how to obtain assistance with understanding the SPD. The Department of Labor has a sample:
This booklet contains a summary in English of your plan rights and benefits under ______Plan. If you have difficulty understanding any part of the booklet, contact_____, the plan administrator, at his/her office________. Office hours are____________. You may also call the plan administrator’s office at__________ for assistance.
When a plan is amended, Summary of Material Modifications (SMM) or an updated SPD is provided to participants. An SMM explains what provisions in a plan changed and how the amendment affects participants. If a non-English notice applies to an SPD, it also applies to the SMM.
Translation Strategies & Consistency Across Communications
The same criteria and notice requirements apply when providing participants with a Summary Annual Report in English, which summarizes information included in a plan’s annual Form 5500 filing.
Rather than dealing with notices, it may be desirable to arrange for translation of these materials, along with other information about the plan. Companies that sponsor more than one plan should aim for consistency in messaging when participants need information on the plans in their primary language.
Special Considerations for ESOP Sponsors
Companies that sponsor an Employee Stock Ownership Plan (ESOP) have additional considerations in explaining employee ownership and its benefits. Providing a glossary of plan terminology and frequently asked questions about the ESOP in the participants’ primary language can enhance understanding and engagement.
By proactively addressing language barriers, plan sponsors can ensure that all participants have equal access to important plan information, fostering a more inclusive and informed workforce.
