DOL – New Electronic Disclosure Guidance for Pension Plans under ERISA

10/21/2019 Written by: Patrick Haynes, Esq., LL.M.

The DOL (US Department of Labor) is proposing in this document a new, additional safe harbor for the use of electronic media by Retirement plans to furnish information to participants and beneficiaries of plans subject to the Employee Retirement Income Security Act of 1974 (ERISA). The proposal, if adopted, would allow plan administrators who satisfy specified conditions to provide participants and beneficiaries with a notice that certain disclosures will be made available on a website. Individuals who prefer to receive these disclosures on paper will be able to request paper copies and to opt out of electronic delivery entirely. The Department expects that the proposal, if adopted, would improve the effectiveness of the disclosures and significantly reduce the costs and burden associated with furnishing many of the recurring and most costly ERISA disclosures. This document also contains, in section D of the preamble, a Request for Information that explores whether and how any additional changes to ERISA’s general disclosure framework, focusing on design, delivery, and content, may be made to further improve the effectiveness of ERISA disclosures.DOL’s proposed regs will improve upon the 2002 Electronic Disclosure Safe Harbor, and the Field Assistance Bulletins (2006-03, 2008-03), Technical Release 2011-03R and their 2011 Request for Information. While there is a comment period open for 30 days, the proposed guidance will be posted on Wednesday, October 23, 2019, and we will update this article and the links with that guidance as it is released.

Proposed guidance here: https://s3.amazonaws.com/public-inspection.federalregister.gov/2019-22901.pdf

The DOL understands that much has changed in this area, and that their guidance has not kept pace. They cite that evidence suggests substantial access to and use of electronic media:

  • A 2017 survey by the U.S. Census Bureau, for instance, found that 87 percent of the United States population lives in a home with a broadband internet subscription.
  • A 2018 study concluded that 93 percent of households owning defined contribution accounts had access to, and used, the internet in 2016.
  • A 2015 survey of retirement plan participants’ online habits indicated that 99 percent reported having internet access at home or work, and 88 percent of respondents reported accessing the internet on a daily basis.
  • A 2015 report observes that smartphones are used for much more than calling, texting, or basic internet browsing. Based on surveys, the report notes that: 62 percent of smartphone owners have used their smartphones in the past year to look up information about a health condition; 57 percent to do online banking; 44 percent to look up real estate listings; 43 percent to look up information about a job; 40 percent to look up government services or information; 30 percent to take a class or find education content; and 18 percent to submit a job application.

Citing their desire to comply with Executive Order 13847 (08/31/2018) which affirmed the Federal Government’s policy to expand access to workplace retirement plans for American Workers—Federal Regulators understand that complex regulations are a hurdle and a burden for Employers, and that more needs to be done to reduce those burdens.

While current regulations and guidance may continued to be relied upon, the proposed §2520.104b-31 provides a new, optional method for compliance with ERISA’s general standard for delivery of disclosures to participants and beneficiaries. Specifically, proposed paragraph (a) provides that the administrator of an employee benefit plan may satisfy §2520.104b-1(b)(1) with respect to covered individuals and covered documents, as described below, by complying with the notice, access, and other requirements of the proposal.

Critical Note for Health & Welfare Plan readers:On Page 32 of 115, the DOL states that these new methods apply to retirement plans only. And, as proposed, do not apply to employee welfare benefit plans. But, they will continue to study the developments in the retirement plan disclosure arena, so change may not be too far off.

Notice & Access Method

The new method would involve the distribution of electronic NOTICES and then provide ACCESS to those Notices on a website or intranet. The DOL is exploring email, multimedia messaging and mobile applications and their uses in this regard. The do not wish to inhibit innovation and acknowledge that delivery methods should continue to expand as technology expands, so they will be promoting technical neutrality. They realize that an over emphasis on technology may be counter-intuitive and possibly an impediment for a very small business, and/or require too much of an investment for others. That’s why this guidance will offer new and optional methods to comply.

Employers that assign an Email address to a new employee will be able to automatically enroll that employee in the “Notice & Access” method, where the employee will remain unless and until he/she opts out of that method. The employee can also provide a different email address for this process.

This safe harbor will differ from previous efforts in that the employee need not be a specific type of employee to qualify for this method. Anyone with a smartphone, laptop, mobile computing device, etc. will be able to receive their ERISA related retirement plan documents, notices, 5500s, SPDs, SMMs, and SARs.

Remember, these changes may be used for changes in how you communicate retirement plan notices, but will have NO effect on your health & welfare benefit compliance efforts. Those efforts need to continue as they have. For more information on ways that a health & welfare plan can comply with the DOL’s electronic distribution rules, please read this informative piece. Should you have any questions, please contact your Account Manger and or Sales Executive. 


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