DOL Bulletin Clarifies Conflicting Funding Notice Rules

2025-04-24

Reading Time: 3 minutes 45 seconds

On April 3, 2025, the Department of Labor (DOL) released new guidance to help plan administrators resolve conflicting requirements for annual funding notices. The confusion stems from updates made under the, which changed key elements of what defined benefit plans must disclose. Although the statute took effect for plan years beginning after December 31, 2023, the DOL’s existing regulations had not yet been updated to match. For calendar-year plans, funding notices for the 2024 plan year are due by April 30. Until now, administrators were left to weigh two competing sets of rules without clear direction. Field Assistance Bulletin 2025-02 addresses that gap.

The DOL has confirmed that plan sponsors may follow the updated SECURE Act 2.0 requirements and that good-faith compliance with the new law will be treated as acceptable during this transition period, even if it differs from what the regulations currently require. To help clients, prospects, and others, JLK Rosenberger has provided the key details below.

Background

Annual funding notices serve as a key communication tool between defined benefit plans and participants. These notices summarize the plan’s funded status, including the value of plan assets, liabilities, and the plan’s ability to meet its long-term obligations. Under ERISA Section 101(f), plans are required to furnish this information annually to participants, beneficiaries, the PBGC, and other interested parties.

Historically, the DOL’s regulations outlined how this information should be calculated and disclosed. Funding levels were reported using the Funding Target Attainment Percentage (FTAP) based on actuarial values determined at the beginning of the plan year. Model notices served as templates for meeting the requirement.

The SECURE Act 2.0 changed that. Effective for plan years beginning after December 31, 2023, the law revised ERISA to require new methods for measuring and reporting funding levels. Notices must now use fair market values of assets and liabilities as of the plan year’s end, provide actual participant counts rather than estimates, and include average return on assets for the year. Additional disclosures were added to explain how PBGC guarantees work in the event of plan termination.

However, the DOL’s regulations were never updated. Plan administrators faced a choice between complying with outdated regulatory instructions or aligning with the law’s current version. Neither option offered a clear assurance of compliance. FAB 2025-02 was issued to resolve that uncertainty.

New Guidance Summary — What the FAB Does

FAB 2025-02 serves as interim guidance from the DOL’s Employee Benefits Security Administration (EBSA). It also outlines how the agency will approach enforcement while the regulatory updates are still in progress. The bulletin confirms that plans may rely on the updated SECURE Act 2.0 provisions and that good-faith compliance with those rules will be treated as meeting the established requirements.

Although the FAB does not revise or repeal the existing regulations, it provides clarity on how plan administrators can proceed for the 2024 plan year. Presented in a question-and-answer format, the bulletin covers technical details such as valuation methods, disclosure language, and acceptable calculation formulas. The DOL’s position is that plans may furnish funding notices based on the updated statutory language and will not be penalized for departing from the outdated model notices or prior methodologies.

What Plan Administrators Need to Know

For plan administrators preparing 2024 funding notices, several key changes now apply:

• Deadlines and Effective Date — The new rules apply to plan years beginning after December 31, 2023. For calendar-year plans, the first notices under the updated framework are due by April 30, 2025.
• New Calculation for Funding Level — Plans must now calculate funded status using the fair market value of assets and liabilities as of the end of the plan year, replacing the prior method based on actuarial values at the beginning of the year.
• Model Notices — Plan sponsors are no longer required to use the model notices found in the DOL’s existing regulations. Custom formats are acceptable as long as they include all required information under the amended version of ERISA.
• Demographic Requirements — Notices must now include participant and beneficiary counts as of the end of the current plan year, as well as the two preceding years. Estimated figures are no longer permitted.
• Average Return on Assets — Plans must disclose average return on assets using one of two acceptable methods outlined in the bulletin. One is based on IRS guidance, and the other uses a simplified return formula involving year-end asset values and investment gains.
• PBGC Disclosure Language — Suggested language is provided to explain the relationship between the plan’s funded status and the level of benefits potentially guaranteed by the PBGC in the event of plan termination.

Special Considerations 

The bulletin also outlines how the DOL will treat certain plan types during this transition period:

• Multiemployer plans that received, or are eligible to apply for, Special Financial Assistance (SFA) may continue to rely on the guidance issued in FAB 2023-01. These plans are not expected to follow the new funding notice framework until further direction is provided.
• At-risk plans, which face additional funding requirements under ERISA, are not required to disclose at-risk liability amounts separately under the new funding notice rules.

Contact Us

While FAB 2025-02 offers clarification, it is not a final rule. The DOL has indicated that additional guidance and formal regulatory updates will follow. In the meantime, plan administrators are encouraged to take action now to align notices with the new requirements. If you have questions about how these changes apply to your plan or need assistance with another tax or accounting issue, JLK Rosenberger can help. For additional information, call 949-860-9902 or click here to contact us. We look forward to speaking with you soon.