May an employer with a new profit-sharing plan not mail the annual statements to participants who terminated with 0% vested while mailing all the other participant statements?
Rev. 05/25/06, E-mail Alert 2006-10

No. There is an ERISA requirement to provide a terminated employee with a statement of her/his balance and its vested status. [ERISA 209(a)(1)(B) and (C)] In light of this requirement, the employer must provide a statement to terminated employees informing them of the fact that they are 0% vested and thus have no vested balance in the plan in which they participated.

The current law has the anomaly of requiring statements to be prepared on an annual basis, yet not requiring that a participant receive a statement unless the participant requests it in writing. Even though the employer may not generally be providing statements to participants, statements must be provided to those participants who were terminated or had a break in service during the year for which the statements are prepared. So, the seemingly strange answer to the question is that a participant terminating with a 0% interest must receive the statement, while those with balances who continue to work, need not receive a statement of their account unless they request it in writing.