Under the new DOL proposal, employers with ERISA-covered retirement plans could use electronic delivery as the default method of providing participants with retirement documentation. For participants who prefer a paper copy, they can choose not to participate in their employer’s electronic delivery process and receive a physical copy free of charge.
If adopted, the new rules will follow a “notice and access” type of electronic delivery. Under this process, participants will receive an email called an “internet notice” which should include a title and statement, a brief description of the document posted online, the address of the website where the document is posted, instructions for requesting an item gratuitous. copy, as well as a statement of the participant’s right to opt out and how to do so, and the administrator’s contact information.
The Internet notice should also be written in a way that the average participant can understand, that is, shorter sentences without legal terminology. Generally, an Internet notice must be sent each time a new document is posted online. However, to avoid “email overload,” administrators could incorporate other notices into a single Internet notice to send to participants.
Under the new DOL standards, an administrator would not automatically drop a participant in the electronic delivery process without first notifying the participant on paper. In doing so, the participant must also be informed of their right to request and receive paper copies or to choose not to participate fully in the electronic submission process.
The proposed delivery system for ERISA notifications resembles the methodology used by the US Securities and Exchange Commission (SEC) to provide investors with disclosure documents. The DOL proposal is also intended to align with Internal Revenue Service (IRS) rules regarding electronic delivery of retirement disclosures.
The DOL argues that if the proposal is adopted, retirement plan participants will receive continuous access to retirement documentation, allowing them to conveniently and easily access their information at any time. The notification and access proposal would also provide participants with potentially improved notifications, layered or nested information, word / number search, images and tutorials, and more.
The DOL is accepting comments on the new proposal until November 22, 2019. The agency will determine if additional changes are needed once all comments have been reviewed.
Background to ERISA Retirement Plans
There are approximately 700,000 private retirement plans that must meet ERISA requirements. These requirements mean that administrators must provide multiple documents per year to participants and beneficiaries using a delivery method that is reasonably calculated to ensure that the recipients receive the documents (in person or by first-class mail).
The 2002 Safe Harbor amended previous delivery standards by allowing electronic delivery; however, there are still concerns over the effectiveness of the 2002 Safe Harbor, which some say hinders the wider use of electronic delivery as the default means of delivering retirement documents.
The 2002 Safe Harbor took advantage of the development of technology to allow electronic delivery of certain retirement disclosures. As of now, the 2002 Safe Harbor only applies to two types of retirement plan beneficiaries:
• First, the participants who habitually work online; Y
• Second, participants who give their affirmative consent to receive documents electronically.
To consent, the person must reasonably demonstrate their ability to access information in an electronic format (eg, email address, mobile phone number) that will then be used to receive retirement plan documentation.