Oct 22, 2019

Department of Labor Proposes New Rules for Electronic Retirement Plan Disclosures


On October 22, 2019, the Department of Labor (DOL) proposed new regulations that, when finalized, will give employers greater flexibility with respect to electronic delivery of required retirement plan notices.

Under the proposed regulations, plan administrators can satisfy their notice delivery requirements by posting retirement plan notices to a website, as long as several specific requirements are satisfied.

Covered Individuals.  Website 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.  For current employees, an employer-assigned e-mail address or an employer-provided smartphone is treated as having been provided by the employee.

It is important to note that employer-provided computer access would no longer be required, nor is there an obligation to independently verify the provided e-mail address or smartphone number.

Notice of Internet Availability.  To take advantage of the new electronic disclosure rules, 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 a combined notice may be provided approximately annually (at least once every 14 months).

The Notice of Internet Availability has certain specific content requirements including (i) a brief description of the notice(s) to be posted on the website, (ii) the internet address where the notice(s) can be accessed, and (iii) statements about the right to receive a paper copy of the notice(s) or to opt out of electronic disclosure entirely.  It also may be provided as a stand-alone document or combined with certain other required notices, such as a summary plan description (SPD) or a quarterly account statement.

Under the proposed regulations, if an annual Notice of Internet Availability is provided, it does not appear necessary to affirmatively notify covered individuals when a new notice is posted to the website.  For some notices (such as quarterly account statements), this seems noncontroversial, but it is not clear that the final regulations will continue to allow this for all notices.  For example, it appears that if the annual Notice of Internet Availability is broad enough, it may be possible to post a blackout notice on the website without any affirmative notice sent to affected participants.

Website Standards.  The proposed regulations also include several specific requirements for the website where the notices are posted.  Importantly, the proposed regulations are clear that 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 proposed 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.

Applicability to Health and Welfare Plans.  The proposed 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.

Proposed Effective Date.  The regulations are proposed to be effective 60 days after the final regulations are published, and they may not be relied on until the final regulations are published.

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

Next Steps.  Although the new regulations are not yet effective, it may be worth beginning conversations with recordkeepers and other providers to be ready to take advantage of these new rules when they are finalized.

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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