What is a Summary Annual Report (SAR)?

A Summary Annual Report (SAR) serves as a concise and clear document that summarizes key information contained in Form 5500, which is the annual report filed by retirement plans. The SAR is designed to provide participants with an overview of the financial status and key features of their retirement plan, including details about contributions, benefits, and expenses.

This report is particularly important because it ensures that plan participants are kept informed about the plan’s operations and financial health in an accessible format. The requirement to distribute the SAR ensures transparency and helps participants understand their benefits and the overall management of the plan.

The other options, while related to the administration and reporting of retirement plans, do not accurately describe the purpose of a Summary Annual Report. A detailed quarterly report on investment performance would involve specific investment returns and metrics, which is not the focus of a SAR. A legal document required for plan initiation does not pertain to participant communication but rather regulatory compliance. Lastly, a statistical analysis of plan participant demographics is more focused on the characteristics of the participant pool rather than summarizing financial data and health.