DOL Finalizes Regulations for Retirement Plan Electronic Disclosures
Miller & Martin PLLC Alerts | June 03, 2020
Author: Christopher Crevasse
On May 27, 2020, the Department of Labor published final regulations governing the electronic delivery of retirement plan documents and information. These regulations provide a new safe harbor that should make it easier for plan administrators and their service providers to electronically deliver (either through email or by posting online) required disclosures to retirement plan participants and beneficiaries, rather than having to provide the disclosures in paper form.
The new safe harbor permits the following two options for electronic delivery of documents to covered individuals:
- Plans may post documents on a website if appropriate notification of internet availability is furnished to the electronic addresses of covered individuals.
- Alternatively, plans may send documents directly to the electronic addresses of covered individuals, with the documents either in the body of the email or as an attachment to the email.
Whether using email or posting documents online, employers must ensure that the delivery method protects the confidentiality of personal information relating to any covered individual.
The regulations apply only to “covered documents” that retirement plan administrators must provide to “covered individuals.” Examples of covered documents include a summary plan description (SPD), a summary of material modifications (SMM), a summary annual report (SAR), and an annual funding notice. A covered individual is defined as a participant, a beneficiary, or another individual, such as an alternate payee, entitled to covered documents.
Under the safe harbor, a covered individual must either provide an electronic address (an email address or smartphone number) or have one assigned to them by their employer. An electronic address assigned by an employer must be for employment-related purposes, including the electronic delivery of covered documents.
Before a retirement plan may use the new safe harbor, covered individuals must be furnished an initial paper notification that informs them of the new electronic delivery method, the electronic address that will be used, and the right to opt out of electronic delivery if the individual prefers paper delivery. Covered individuals can request paper copies of specific documents or can opt out of electronic delivery entirely, at any time, free of charge. Plan administrators may also offer recipients a “pick and choose” option to receive some documents in paper form and some electronically. Similarly, a plan administrator that electronically delivers some covered documents need not use electronic delivery for all covered documents.
Covered individuals must also be furnished a notice of internet availability (NOIA) each time a new covered document is made available on an internet website. Each NOIA must identify or describe the covered document that is being posted online, include an address or hyperlink to the website, and inform the covered individual of the right to request paper copies or to opt out of electronic delivery altogether. The regulations permit an annual NOIA that includes information about multiple covered documents in place of multiple NOIAs throughout the year. However, certain documents cannot be included in a combined NOIA. For example, plan administrators may not include an SMM or quarterly benefit statements in a combined NOIA. Instead, those covered documents must have their own NOIAs.
A covered document posted to a website must remain available on the website until it is superseded by a subsequent version, if applicable, but in no event less than one year. Each NOIA must inform participants that the covered document may not be available past this time frame.
We recommend that employers/plan administrators consult with their counsel and retirement plan recordkeepers and/or third party administrator to determine whether and when the new safe harbor can be implemented and to formulate a timeline that includes each of the safe harbor requirements.
The new regulations officially become effective on July 27, 2020. However, the DOL has announced that plan administrators may rely on the new regulations immediately.
A complete copy of the new regulations can be found here.