The Department of Labor (DOL) has announced the release of a new proposed rule for safe harbor for electronic delivery of participant notices. The proposed rule is scheduled to be released on October 23. This proposed rule has been expected since President Trump’s Executive Order in August of 2018 which called for an expansion of electronic notices to participants to ease the administrative burden on retirement plans.
A preliminary, unpublished version of the rule has been made available on the Federal Register by the Employee Benefits Security Administration (EBSA). This rule would allow for electronic notification to participants of information to be made available online, including instructions on how to access the notices as well as an option to receive paper versions of the disclosures. This electronic notification could go to a plan sponsor provided email (work email), plan sponsor issued smartphone (work phone, if a data plan is included), or a personal email address as supplied by the participant. In order to default disclosures to the electronic format, plan sponsors must first notify participants, via paper, of their ability to opt for paper disclosures.
The new rule would be in addition to the current safe harbor rule from 2002 which allows plan sponsors to use electronic means for required notices for those participants who have access to the plan sponsor’s electronic information system (email) as an integral part of their duties or participants and beneficiaries who have given affirmative consent to receive the documents electronically. Plan sponsors would be able to choose between the two safe harbors or use both depending on the needs of the plan participants.
Further field assistance bulletins were made after 2002 expanding and clarifying the safe harbor, but the requirement to opt in to receive documents electronically outside of a work email has remained until now.
The DOL has stated that they expect the reduction in costs for materials, printing, and mailing to save ERISA covered retirement plan sponsors and participants approximately $2.4 billion over the next 10 years.
Stay tuned for more updates as the proposed rule is released. We will continue to monitor the progress of this long-awaited change.
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