DOL Final Rule on E-Delivery
If you’ve wanted to deliver your retirement plan notices electronically instead of being saddled with sending paper (or paying someone else to send paper) and worried that the 2002 guidance was cumbersome and outdated, then good news! On May 21, 2020 the DOL unveiled a new safe harbor for electronic disclosures, effective 60 days following the May 27 publication in the Federal Register.
Employers will be allowed to make better use of modern technology, increasing efficiency, reducing plan costs to the benefit of plan participants, and allowing information to be sent to plan participants where COVID-19 may have made traditional methods impossible.
Here are the highlights. You can find the full text (which is what you should rely upon) here! Ultimately, if you follow the rules and meet their guidelines, you can fall under the electronic communications safe harbor for all retirement plan notice delivery.
Paper is still ok, as is the right to receive paper disclosures. That hasn’t changed since the 2002 guidance. The provision guarantees a right to request and receive paper copies of specific covered documents or to globally opt-out of electronic delivery altogether. Plan sponsors are prohibited from charging covered individuals a fee in connection with their exercise of these rights and are prohibited from having procedurally cumbersome or complex processes for exercising these rights. The final rule mandates that covered individuals receive multiple reminders, on different mediums, of these rights. Thus, a participant’s initial decision against opting out of electronic delivery is not permanent and can be revisited with each reminder or at any time.
Start off by notification/obtaining consent. Plan administrators are required to notify individuals “on paper that covered documents will be furnished electronically to an [email] address.” That notification must include the email address that will be used, any relevant instructions for accessing documents, a statement of the participant’s right to opt-out of electronic delivery and receive a paper copy instead, and an explanation of how to exercise this right.
If you’re going to post documents to a website, like a company intranet site, plan administrators are required to provide a “notice of internet availability” to participants by email. This notice is provided when the document is posted on a website and, if the notice applies to multiple disclosures, annually thereafter. That notice has specific requirements, like listing how long it will be available on the site, how to access it, etc. The website also has specific requirements, including a minimum posting time of one year, being searchable and printable, and easily readable.
You’ll need to track the bounces. Your fancy electronic delivery system “must be designed to alert the administrator of [an] . . . invalid or inoperable [email] address.” And you’d better update any bouncebacks ASAP with a valid email address.
Consider attachment versus sending text. DOL also outlined a special method when the disclosure will be attached to or included in an email itself, including a very specific subject line for the email, certain identifying information, and notification of the participant’s right to a paper copy of the disclosure. Be sure that the disclosure is in plain English as well.
What about terminated employees? Under this provision, plan administrators must “take measures reasonably calculated” to confirm the email addresses for terminated employees, as many employees provide their employer-supplied email address when consenting to electronic benefit disclosures.
Overall, we’re very excited for our clients to be able to use e-delivery much more effectively under the new safe harbor!