There is a new electronic delivery option for retirement plan sponsors who are looking for an easier and more efficient means of providing required plan information disclosures to plan participants and beneficiaries. Retirement plan administrators can now electronically notify participants and beneficiaries that certain disclosures are available on a specified website. In addition, retirement plan administrators can more easily directly deliver the disclosures by email. Participants and beneficiaries must be able to opt out of electronic delivery and to request paper copies of disclosures without cost. Notably, the new option is not approved for delivery of health and welfare plan disclosures at this time.
Background. Current rules for electronic delivery of documents date back to 2002, and many employers have found them difficult to utilize.
The 2002 rules allow employers to use electronic delivery only for employees who (a) are “wired at work” (i.e., those who could access electronic disclosures at their job sites and who utilized their employers’ electronic information systems as an integral part of their jobs), or (b) affirmatively consent to receive documents electronically. The consent requirements are difficult because they require advance disclosure and identification of all documents and identification of necessary hardware and software requirements. In addition, the consent must be updated if hardware and software requirements change.
The new rule from the Department of Labor is not as onerous in terms of obtaining employee consent for electronic disclosures. It should make it easier and less expensive for plan administrators to distribute required retirement plan disclosures – particularly given the logistical and economic challenges that employers are facing as a result of the COVID-19 pandemic. Some of the details follow.