Complying with all the required notices and disclosures to retirement plan participants can be expensive and burdensome. The Department of Labor (DOL) has moved one step closer to making it easier and less expensive for plan sponsors to meet these requirements.
On October 23, 2019, the DOL proposed a new rule regarding electronic disclosure for retirement plans. If finalized, the rule would generally expand a plan sponsor’s ability to use electronic means to provide plan disclosures.
Currently, a plan sponsor must examine whether a participant interacts with an electronic system as an integral part of the job or must obtain affirmative consent to electronic disclosure (even if the employer has an electronic address for the employee). The proposed regulation, by contrast, would allow electronic disclosure to be the default delivery method for individuals who provide an electronic address (such as an e-mail address or smartphone number). In addition, if an employer assigns an electronic address to an employee, then the employee is treated as providing an electronic address—effectively giving employers who assign e-mail addresses or phones to employees the ability to use electronic delivery as the default delivery method, regardless of whether using the e-mail or phone is an integral part of the employees’ duties.
After an initial paper notice, plan administrators would be able to satisfy their disclosure obligation by posting required disclosures on a website and delivering an electronic notice of availability to covered individuals. The regulations would require the website, delivery system, and notices to meet a host of specific requirements.
These regulations are not yet effective, so companies should not rely on these more generous disclosure rules just yet. However, the DOL appears to be on the fast track to finalize the rules, so companies may consider looking into website and delivery system options now so they are ready to implement new disclosure procedures and begin reaping the financial rewards of less paper as soon as possible after the rule is finalized.