On May 20, 2020, the U.S. Department of Labor (DOL) and the Employee Benefits Security Administration (EBSA) published their much-anticipated final rule to expand the ability of private sector employers to communicate mandated retirement plan disclosures and other information online or by email.
Current electronic delivery rules
While required retirement plan notices can always be distributed to plan participants in hard copy form—either by distributing copies at a company meeting or by mailing them to each employee’s last known address—posting a required disclosure in a break room or other common area is not acceptable.
Under current electronic delivery rules, employers can electronically distribute retirement plan notices to current employees at their work e-mail address if the following requirements are met:
- The employee must be able to access their work e-mail at a location where he or she is reasonably expected to perform his or her duties as an employee.
- Access to the e-mail account is an integral part of the employee’s job responsibilities.
- If a 401(k) participant does not meet these requirements (e.g., former employees or beneficiaries with an account balance), they must affirmatively consent to electronic delivery for the method to be an option.
New electronic delivery option
The “notice and access” rule will allow employers to electronically deliver retirement plan notices to all plan participants—regardless of their current employment status—by posting them to a website. To qualify for the new DOL safe harbor, several requirements must be met:
Covered individuals: Website disclosure can only be made to retirement plan participants or beneficiaries that have provided an e-mail address or smartphone number. For active employees, an employer-provided e-mail address or smartphone number automatically satisfies this requirement. Access to an employer-provided computer is not required.
Covered documents: All ERISA-mandated notices qualify, other than documents that must be furnished upon request. Covered documents must be posted to the website no later than their ERISA deadline.
Notice of Internet Availability: Covered individuals must receive an electronic Notice of Internet Availability each time a covered document is posted to the website. Certain covered documents may be covered by a combined notice. A combined notice must be provided at least once every 14 months. Notices must remind the participant of their right to a paper notice, of the right to opt-out of electronic delivery altogether, and the procedures to exercise such rights.
Initial paper notice: Before reliance is possible, employers must provide each covered individual with a paper notice about the electronic delivery of future notices and the right to receive paper notices instead.
Website standards: Employers must take measures reasonably calculated to ensure that covered documents are 1) posted to the website no later than their ERISA-mandated deadline, 2) available until they are superseded, 3) presented in an understandable format, 4) suitable for both online viewing and printing, and 5) searchable.
Inoperable electronic addresses: The system for furnishing the notice of internet availability must be designed to alert the employer of an invalid or inoperable electronic address. If an employer becomes aware of an invalid or inoperable electronic address, they must treat the covered individual as if they had opted out of electronic delivery if the issue cannot be promptly cured.