Inform and Respond: Communicating with Plan Participants

Feb 19, 2026

Sponsoring a retirement plan requires timely information sharing, as well as diligence in responding to inquiries from participants and beneficiaries. While it is always necessary to follow Department of Labor protocols, doubling down on communications in times of uncertainty and change is a wise strategy. Market volatility, regulatory shifts and rising costs are among the news headlines that ratchet up monetary concerns, and generate new questions about the status of retirement savings. Financial worry at work is not just bad for employees–it’s proven to be bad for businesses. For retirement plan sponsors, even worse, unaddressed questions about the retirement plan are not “just” an honest mistake: they can rapidly spiral into claims of fiduciary failure.

Provide Clear and Timely Information

As a retirement plan sponsor, you are automatically a fiduciary–meaning that in accordance with the Employee Retirement Income Security Act (ERISA), you must take even more care of the funds placed in your trust by plan participants than you do of your own money. Since most of us are pretty darn careful with our own money, it’s not hard to understand that the fiduciary standard of care represents a very high bar. Above and beyond the rules and requirements, it’s useful to remember that, as Eric Dyson puts it on the Be More Than A Fiduciary podcast: “Serving as a fiduciary is not just an honor and a privilege; it is a profound responsibility intertwined with the essential qualities of stewardship, governance and leadership.”

When it comes to leadership, attorney and ERISA specialist Ary Rosenbaum points out that even with outsourcing, plan sponsors must take communication with participants seriously: “I’m talking about eliminating the confusing jargon that this industry uses. All communication from you and your plan providers must be in simple, easy-to-understand terms. Unless you are in the retirement plan business, you’re not going to have employees that understand the intricacies of retirement plans. So make sure they can understand.”

The obligation to provide clear and timely information to retirement plan participants is specifically addressed by the U.S. Department of Labor (DOL) in Meeting Your Fiduciary Responsibilities. A clear Summary Plan Description (SPD) is among the critical documents on the DOL’s must list for participants and beneficiaries, and it needs to address these specifications:

The Summary Plan Description (SPD) — the basic descriptive document — is a plain language explanation of the plan and must be comprehensive enough to apprise participants of their rights and responsibilities under the plan. It also informs participants about the plan features and what to expect of the plan. Among other things, the SPD must include information about:

When and how employees become eligible to participate;
The source of contributions and contribution levels;
The vesting period, i.e., the length of time an employee must belong to a plan to receive benefits from it;
How to file a claim for those benefits; and
A participant’s basic rights and responsibilities under ERISA.
This document is given to employees after they join the plan and to beneficiaries after they first receive benefits. SPDs must also be redistributed periodically and provided on request.

Additional information which fiduciaries must ensure is provided to retirement plan participants in accordance with the Department of Labor specifications and timeframes includes:

The Summary of Material Modification (SMM)
An Individual Benefit Statement (IBS)
The Automatic Enrollment Notice
A Summary Annual Report (SAR)
The Blackout Period Notice

Monitor Service Providers and Don’t Forget Cybersecurity

Plan communications and information dissemination is typically outsourced to service providers. Keep in mind, however, that sponsors retain a fiduciary responsibility to monitor all services. It’s wise to periodically review communication protocols and calendars with service providers. Ensure that all participant inquiries, communications and resolutions are carefully attended to and documented, and don’t neglect reviewing all plan information for accuracy and clarity. While updating communications protocols,

keep cybersecurity in mind too. The Department of Labor has obligated retirement plan sponsors to mitigate cybersecurity threats, and provides Online Security Tips for dissemination to participants and beneficiaries.

Civil Penalties for Communication Errors

Given their personal liability for errors and omissions related to the retirement plan, honest mistakes of any kind turn out to be quite costly for retirement plan fiduciaries. Civil penalties are periodically increased,and add up fast. Communication errors are no exception. Ascensus has shared a current breakdown of violations and penalties, and here, for example are several associated with communication shortcomings:

Per day, for failure to properly provide a plan black-out notice, or notice of right to divest employer securities (each recipient being a separate failure); penalty rises from $169 to $173
Per day, for failure to provide DOL-requested documents; penalty increases from $190 to $195 (not to exceed $1,956 per request)
Failure to properly provide benefit statements and maintain records vis-à-vis former participants and beneficiaries; penalty rises from $37 to $38 per required statement

In addition to risking penalties related to failure to provide designated communications to participants, retirement plan sponsors also run the risk of triggering participant complaints via Ask EBSA. In 2025 alone, the Employee Retirement Benefits Administration reported closing over two hundred thousand complaint inquiries, many of which become catalysts for investigations.

Outsourced Plan Services Do Not Eliminate Sponsor Risks

Despite diligence, mistakes happen, and when they do, ERISA fiduciaries, like plan sponsors, can be held personally liable. In addition to penalties, defense is costly and disruptive: even just one hour of ERISA legal defense can cost over $600. To help retirement plan sponsors manage their personal liability, Colonial Surety Company offers an efficient and affordable Fiduciary+Cyber Liability Insurance bundle. Specifically, for a few dollars a day, you can protect yourself in the event of errors and oversights with:

$1,000,000 for Defense and Penalties if you are faced with alleged or actual breaches of fiduciary duty.
Cybersecurity Coverage for the business and plan, which addresses Department of Labor recommendations, and includes expert response services to curtail damage after an incident.

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