Seyfarth Synopsis: Following up on proposed rules issued in October 2019, the Department of Labor (“DOL”) just issued final regulations addressing an employer’s or plan administrator’s ability to send certain retirement plan notices to participants electronically. These methods have generally included email or posting to an employer or plan intranet site, but now can include text messaging or other electronic delivery to smartphones. Curiously, these final rules do not apply to welfare benefit plan communications. Perhaps the DOL will address such plans in the future. For a deeper dive, see our Legal Update on these final regulations.
DOL electronic delivery regulations were originally issued in 2002, when electronic delivery technology was less advanced and plan participants’ access to computers was less prevalent. It’s hard to remember life before the iPhone and subsequent smartphone technology, but the 2002 DOL final regulations were issued 5 years before we even knew what an iPhone was! For those of us that do remember, not all of us had a home computer or a computer on our desks at work. Some employers even provided computer “kiosks” for employees without a desktop computer to be able to access the employer’s intranet site and electronic communications.
In 2007, the iPhone was released, and 13 years later, it is hard to find someone who does not own a smartphone. Times have certainly changed, leaving the 2002 regulations woefully out-of-date (most people now do not even know what a computer kiosk is). As a result, plan sponsors and administrators have struggled to comply with the antiquated rules electronic delivery rules, and frankly, most just fell short.
To address these issues, the new final regulations provide a “notice and access” electronic delivery safe harbor method, which allows plan sponsors and administrators significantly more flexibility when sending electronic plan notices and communications. Before taking advantage of the safe harbor, plan sponsors and administrators must provide a one-time paper notice to all participants (or would be participants – e.g., new employees) informing them that plan notices and communications will be provided electronically and permitting them the opportunity to opt-out. Assuming the individual does not opt-out, the new safe harbor permits electronic delivery to anyone who has a company-provided email address, computer, tablet or smartphone capable of receiving the written notice or communication. Whenever sending plan notices or communications, the message must include a “notice of internet availability,” which can be event specific or can be combined for common disclosures (e.g., SPDs, SMMs, fee or investment disclosures).
Most important, plan sponsors and administrators will need to monitor any “bounce-backs” and take reasonable steps to cure the problem or communicate with such individual by paper communication (as if that individual opted-out of electronic delivery). While this will require sponsors and administrators to maintain a separate list of individuals who need to receive plan communications on paper, the expectation is that such a list will be short (and perhaps primarily limited to former employees).
