May 22, 2020

Department of Labor Finalizes New Rules for Electronic Retirement Plan Disclosures

Woman checking her smart phone

On May 21, 2020, the Department of Labor (DOL) issued final regulations that will give employers greater flexibility with respect to electronic delivery of required retirement plan notices.

Under the new regulations, plan administrators can satisfy their notice delivery requirements by sending retirement plan notices by email or posting retirement plan notices to a website (which includes a mobile application), as long as several specific requirements are satisfied.

Covered Individuals.  Electronic disclosure can be made to any participant, beneficiary or other individual required to receive a notice as long as that individual has provided an e-mail address or smartphone number, as applicable.  For current employees, an employer-assigned e-mail address or an employer-provided smartphone number is treated as having been provided by the employee.  It is important to note that employer-provided computer access would no longer be required. 

Email Distribution.  A plan administrator may send retirement plan notices by email, with the notice either included in the body of the email or as an attachment.  The email must satisfy certain content requirements including (i) the subject line must state “Disclosure About Your Retirement Plan”, and (ii) if the notice is sent as an attachment, the body of the email must identify or briefly describe the notice.  In addition, the notice must be provided in a widely available format that is searchable and can be read online and printed.

Web Posting.  To take advantage of the new electronic disclosure rules option of posting retirement plan notices to a website, a plan administrator must provide covered individuals with an electronic Notice of Internet Availability.  This notice is required to be provided each time a new required notice is posted to the website, or with respect to a summary plan description and other notices that are provided annually that do not require participant action, a combined notice may be provided approximately annually (at least once every 14 months).  The DOL and Department of Treasury may expand the list of notices that may be included in a combined notice in the future.

A combined notice cannot be used for notices issued more frequently than annually (such as quarterly account statements) or for notices based on the occurrence of a particular event (such as a blackout notice or a qualified domestic relations order determination).

The Notice of Internet Availability has certain specific content requirements, including:

  1. A brief description of the notice(s) to be posted on the website;
  2. The internet address, or a hyperlink to the internet address, where the notice(s) can be accessed;
  3. A title, legend or subject line that reads “Disclosure About Your Retirement Plan”;
  4. A statement that reads “Important information about your retirement plan is now available. Please review this information.”and
  5. Statements about the right to receive a paper copy of the notice(s) or to opt out of electronic disclosure entirely.

In addition, the Notice of Internet Availability must be provided as a stand-alone document.

The final regulations also include several specific requirements for the website where the notices are posted, including:

  1. Each notice must be available for the longer of 12 months or, if applicable, until it is superseded by an updated version;
  2. The plan administrator must take reasonable steps to protect covered individuals’ confidential personal information; and
  3. The notice must be provided in a widely available format that is searchable and can be read online and printed.

Importantly, the website does not need to be maintained by the plan sponsor; it can be a website of a third-party service provider.

Initial Paper Notice.  Before taking advantage of the new rules, the plan administrator must provide each covered individual with a paper notice about the electronic delivery of future notices and the covered individual’s right to receive paper versions instead.

Use of Employer-Assigned Email Addresses.  As originally proposed, the regulations would have allowed employers to assign employees with email addresses specifically for the purpose of receiving retirement plan notices.  The final regulations, however, require that an employer-assigned email address be one that is assigned “for employment-related purposes” and not solely for the delivery of required retirement plan notices.  The email address must be assigned by the employer, and it may not be assigned by the plan administrator or recordkeeper.

Invalid or Inoperable Electronic Addresses.  The system used for sending email notices or Notices of Internet Availability must be designed to alert the plan administrator of invalid or inoperable email addresses and smartphone numbers.  The plan administrator then must take reasonable steps to resolve the issue, which may include (i) utilizing a covered individual’s secondary email address, (ii) obtaining a new email address or smartphone number from the covered individual, or (iii) treating the covered individual as if he/she has opted to receive paper versions.

For separated participants who had notices or Notices of Internet Availability sent to an employer-assigned email address or smartphone number, the plan administrator will need to obtain a new email address or smartphone number for the participant unless it takes reasonable steps to ensure the participant has continued access to the employer-assigned email address or smartphone number.

Applicability to Health and Welfare Plans.  The new regulations currently apply only to retirement plan notices.  The DOL notes that they may be expanded to include health and welfare plan notices in the future, but these plans may raise different considerations.

Effective Date.  The regulations will become effective 60 days after they are published (with a likely effective date of around July 27, 2020).  However, the regulations may be relied on immediately, as the DOL has announced a nonenforcement policy with respect to plan administrators who choose to begin relying on the new regulations sooner.

Also, it is important to note that the regulations are intended to operate as a separate alternative for electronic disclosures.  They are not intended to replace any of the existing electronic disclosure rules, and those may continue to be used.

Next Steps.  With the ability to take advantage of the new regulations immediately, it may be worth beginning conversations with recordkeepers and other providers to begin taking advantage of these new rules.

If you have questions about these new electronic disclosure rules, please contact your Executive Compensation and Employee Benefits Counsel at Smith, Gambrell & Russell, LLP.


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