Benefits Monthly Minute UPDATE: Hot-Off the (Electronic) Press! DOL Issues New E-Disclosure Rules
Today, the DOL announced publication of a final rule that expands the ability of retirement plans to deliver participant disclosures online or via email by establishing a new, voluntary safe harbor that allows the use of electronic media as a default for participant disclosures. The final rule is in response to the previously reported October, 2019 proposed rule which allowed plan administrators to notify retirement plan participants that required disclosures, such as SPDs, will be posted on a website. Here are some key points of the final rule:
- There are two optional electronic default methods. The new, voluntary safe harbor is for retirement plan administrators who want to use electronic media, as a default, to furnish covered documents to covered individuals under two optional methods:
- Website Posting: post covered documents on a website if appropriate notification of internet availability (NOIA) is furnished.
- Email Delivery: email covered documents directly to covered individuals.
- Who is a covered individual? A participant, beneficiary or other individual entitled under ERISA to receive covered documents who provides a valid electronic address (e.g., email, including an employer-provided email, or smart phone number).
- What about plan participant protections? Covered individuals can request paper copies, or globally opt out of electronic delivery entirely. Before using the new safe harbor, covered individuals must be furnished an initial paper notification stating that the way they currently receive retirement plan disclosures (e.g., via US mail) is changing, informing them of the new electronic delivery method, the electronic address that will be used, the right to opt out, etc. Covered individuals generally must be furnished an electronic NOIA each time a new covered document is made available on the website and satisfy specific NOIA content requirements. Documents must remain on the website for at least one year, and system checks for invalid emails and electronic address accuracy after employment termination are also required.
As with the proposed rule, the final rule does not limit a plan administrator’s use of the existing safe harbor for electronic delivery (or distribution via hand delivery or mail), and at this time the final rule also does not apply to welfare benefit plans. The final rule is technically effective 60 days after its May 27 publication, however, the DOL has stated it will not take any enforcement action for those relying on the safe harbor before that date in support of the government’s broader effort to respond to COVID-19 and to reduce plan administrative burdens.
The KMK Law Employee Benefits & Executive Compensation Group is available to assist with these and other issues.
KMK Employee Benefits and Executive Compensation email updates are intended to bring attention to benefits and executive compensation issues and developments in the law and are not intended as legal advice for any particular client or any particular situation. Please consult with counsel of your choice regarding any specific questions you may have.