DOL finalizes rule expanding use of electronic delivery for plan documents

The Department of Labor finalized a regulation that will expand the use of electronic media, as a default, to deliver required information to participants and beneficiaries of ERISA retirement plans. The electronic disclosure safe harbor will allow plan administrators to meet their information disclosure responsibilities more efficiently.

Currently, under guidance from 2002, participants may opt-in to receive plan information and disclosures electronically rather than in paper form. The new rule, effective at the end of July, allows plan sponsors to use electronic delivery via website or email as the default unless a participant opts-out of receiving electronic disclosures. The regulation is expected to save plan administrators nationwide as much as $3.2 billion in printing and mailing costs over ten years.

Among the conditions that must be met to use electronic delivery are:

PARTICIPANT NOTICE REQUIREMENTS

• a participant must receive an initial paper notice that electronic delivery will be used unless they opt-out
• participants and beneficiaries would have the right to opt-out of electronic disclosure on a per-document or a global basis, and would have the right to paper copies of any covered documents
• for any disclosures made available through a website, participants must receive an electronic “notice of internet availability” (NOIA) that has a brief, simple description of the documents or information available and meets other specified content and delivery requirements. An annual NOIA may include information about multiple covered documents.
• disclosures made through email may be attached to the email or contained within the email

CONTENT AND DELIVERY REQUIREMENTS

• for both website and email delivery, the documents or information must be in a format that is easily readable on-line, easily printed, and searchable
• plan administrators would need to take reasonable steps to obtain a new email address for separated employees who received documents through an employer website or work email address
• plan sponsors are expected to take reasonable steps to obtain updated email addresses from participants. If electronic notices or emails are undeliverable, paper delivery of information would need to resume.

The rule allows for electronic delivery of quarterly benefit statements, blackout notices, summary plan descriptions, summary of material modifications, summary annual reports, fee disclosures for participant directed plans, qualified default investment alternative notices, annual pension plan funding notices, and “any document or information that the administrator is required to furnish to participants and beneficiaries pursuant to Title I of the Act, except for any document or information that must be furnished only upon request.”

While the regulation is effective in late July, the DOL stated that it may be utilized immediately.

For more details, see FACT SHEET: Electronic Disclosure Safe harbor for Retirement Plans.

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