New DOL Electronic Disclosure Rules – What You Need to Know

The Department of Labor (DOL) issued final electronic disclosure rules for retirement plans on May 27, 2020 (2020 Safe Harbor). We are already fielding questions about these new rules and have provided answers here to some of the common questions we are hearing from clients.

Note that this blog post provides an overview and does not describe every requirement of the 2020 Safe Harbor. That said, if you have specific questions on compliance with the 2020 Safe Harbor or would like assistance transitioning your plan disclosures to the 2020 Safe Harbor format, please contact a member of the Faegre Drinker benefits team.

  1. What is the new 2020 Safe Harbor?

    The 2020 Safe Harbor creates an optional alternative method of satisfying the ERISA disclosure requirements for retirement plans. It does not apply to health and welfare plans. The 2020 Safe Harbor allows the use of electronic disclosure as a default if certain conditions are met, while preserving the right of plan participants to receive paper disclosures.

    Previously the default disclosure method was via paper. And, an alternative electronic disclosure safe harbor under DOL regulations allowed for electronic disclosure only to (1) employees who regularly used a computer at work and (2) other participants who affirmatively consented to electronic disclosure (2002 Safe Harbor). The 2002 Safe Harbor remains in effect and can be used by plan administrators who would like to continue providing disclosures via this method.

  2. Who is covered by the 2020 Safe Harbor?

    The 2020 Safe Harbor can be used for plan participants, beneficiaries or other individuals entitled to documents (e.g., alternate payees) who have provided an “electronic address.” An electronic address is broadly defined to include an email address (whether assigned by the employer for employment-related purposes or a personal email address provided to the plan administrator or plan sponsor) or an internet-connected mobile-computing-device (e.g., smartphone) number that can receive text communications.

  3. What can be provided electronically under the 2020 Safe Harbor?

    Plan administrators can provide electronically any document or information required to be disclosed under Title I of ERISA, except for documents that are only provided upon request.

    For example, under ERISA, a collective bargaining agreement (CBA) must be furnished only upon request. Therefore, the 2020 Safe Harbor would not apply to a CBA. In contrast, a Summary Plan Description (SPD) can be provided electronically under the 2020 Safe Harbor because it is required to be disclosed under Title I of ERISA and is not only provided upon request.

  4. What is the process for providing documents electronically?

    Initially, plan administrators must provide all individuals who will be receiving documents under the 2020 Safe Harbor with a paper notice setting forth required information, including information about the new electronic delivery method, the electronic address that will be used and the right to opt out.

    Note: If a plan administrator is currently relying on the 2002 Safe Harbor to provide electronic disclosures and now wants to rely on the 2020 Safe Harbor, then this paper notice will need to be provided to all participants and beneficiaries who will be covered by the 2020 Safe Harbor, including individuals currently receiving electronic disclosures under the 2002 Safe Harbor.Thereafter, plan administrators either can provide the documents (1) directly via email (whether in the body of the email or as an attachment) or (2) by posting the documents to a website and electronically providing participants with a Notice of Internet Availability (NOIA).

  5. If documents are provided directly via email, what information needs to be included?

    The email can contain the relevant disclosure (or disclosures) in either the body of the email or as an attachment to the email. If the disclosure is attached to the email, then the email body needs to contain certain information including but not limited to:

    • A brief description of the document
    • Notice of the right to receive a paper version free of charge
    • Notice of the right to opt out of electronic delivery and receive paper disclosure
    • A telephone number to contact for more information.
  6. What information must be included in the NOIA?

    The NOIA must include specific information detailed in the 2020 Safe Harbor, including but not limited to:

    • Identification of, and in some cases a description of, the covered document
    • Where the covered document is available (e.g., internet website address or hyperlink to the address)
    • The recipient’s right to receive paper disclosure and how to make such a request
    • The time frame that the document must remain on the site
    • The right to opt out of electronic delivery
    • A telephone number to contact the plan administrator.

    The NOIA also may state whether any action is required by the recipient.

    The DOL declined to provide a model notice in order to allow plan administrators flexibility in drafting their own NOIAs.

  7. Can more than one document be included in a NOIA?

    Yes, but only in limited circumstances. Plan administrators can furnish a combined NOIA for the following documents once each plan year and no later than 14 months after the prior plan year’s combined notice:

    • Summary Plan Descriptions
    • Any document that must be furnished annually (not as the result of a particular event) and that does not require action by the individual
    • Documents not included in (a) or (b) as prescribed by the DOL Secretary
    • Any other notice required by the Internal Revenue Code if authorized by the Secretary of the Treasury.

    For documents not listed above, the NOIA must be provided separately for each such document.

  8. How long must plan administrators keep information on the electronic site?

    Documents posted to the electronic site must remain on the site for one year or , where applicable, until they are replaced by superseding documents, whichever is later.For example, if a new SPD is posted on the electronic site four years after the prior SPD was posted, then the prior SPD must remain on the site at least until the new superseding SPD is posted. For other documents, such as a blackout notice, there are no superseding documents and these documents must remain posted for at least one year.

  9. Can plan participants still request paper copies?

    Yes, plan participants (and beneficiaries and alternate payees) can still request a paper copy of any document disclosed under the 2020 Safe Harbor, and the plan administrator must provide at least one copy free of charge.Plan participants, beneficiaries and alternate payees also have the option to “globally opt out” of all electronic disclosures under the 2020 Safe Harbor and receive paper copies for all disclosures and notices.

  10. Can the 2020 Safe Harbor be relied on to provide electronic disclosure to terminated employees who are still plan participants?

    Yes, so long as the plan administrator has a valid electronic address for the former employee. Under the 2020 Safe Harbor, the plan administrator must either ensure that a former employee receiving covered documents via an employer-assigned email address has continued availability of such electronic address or obtain a new electronic address from the former employee that enables receipt of covered documents following termination of employment.For example, an employer may request that the terminating employee provide an updated personal email address for future notifications as part of the company’s standard off-boarding process.

  11. When are the 2020 Safe Harbor rules effective?

    The 2020 Safe Harbor rules apply commencing July 27, 2020. However, the DOL will not take enforcement action against a plan administrator that relies on the 2020 Safe Harbor before that date.

  12. Did anything change from the proposed regulations?

    The DOL adopted a number of changes in response to public comments, including:

    • Allowing direct delivery of covered documents via email
    • Adding a one-year minimum requirement for documents to be posted to an electronic site
    • Revising the list of documents that could be included in a combined NOIA, including the removal of quarterly benefit statements from that list
    • Removing language that appeared to suggest that disclosure had to be posted to an internet website and noting that other formats, such as mobile apps, also could be used
    • Providing an earlier applicability date.