DOL Electronic Retirement Rule Reminders

Just shy of a year ago on May 27, 2020, the US Department of Labor (“DOL”) provided welcomed relief to employers and plan administrators concerning required disclosures for retirement plans subject to the Employee Retirement Income Security Act of 1974 (“ERISA”).

This rule, “Default Electronic Disclosure by Employee Pension Benefit Plans Under ERISA” (“Rule”), which went into effect July 27th, 2020, has and will continue to:

1. Enhance the effectiveness of ERISA disclosures; and
2. Significantly reduce the costs associated with furnishing required disclosures.

This article is a reminder of the e-Delivery Rule requirements that are currently in effect as we move into year two of the rule. The following are key points employers and plan administrators should know:

Covered Individual

This rule applies to covered individuals who are participants, beneficiaries, and individuals entitled to covered documents, who provide the plan with electronic access such as an email address or telephone number.

Covered Documents

For retirement plans, the rule applies to any document that is required to be furnished pursuant to Title I of ERISA, except for those documents that must be provided upon request. This rule does not apply to employee welfare plans due to their uniqueness, but the Department continues to study the future application of the safe harbor for those plans.

Notice of Internet Availability (“NOIA”)

The rule requires plans to provide each covered individual, as defined above, with an NOIA for each covered document, and in some cases, the NOIA can be combined for multiple covered documents. Key factors to consider when issuing these NOIAs are:

• Timing – NOIAs must be furnished at the time the covered document is made available on the plan’s website.
• Content – NOIAs must include the following:
  • A prominent statement such as a title, legend, or subject line reading “Disclosure About Your Retirement Plan;”
  • Inclusion of the statement “Important information about your retirement plan is now available. Please review this information;”
  • Name of the covered document and brief description if the name does not convey its purpose;
  • Internet website address where the covered document is available;
  • Statement noting the covered individual has the right to request a paper copy of the covered document, free of charge, as well as the appropriate methods to request a paper copy;
  • Statement of the right to opt-out of receiving covered documents electronically as well as the method to do so;
  • Telephone number of the plan administrator or other designated representative; and
  • A reminder that the covered document is not required to be available on the website for more than one year after it is superseded by a subsequent version.
• Form and Manner of Furnishing NOIA – The NOIA must be furnished to covered individuals via electronic addresses provided, contain only the content noted above except for pictures or logos a plan administrator may elect to include, be furnished separately from any other documents, and lastly be written in a manner that could be understood by the average participant.

Right to Copies of Paper Documents or Globally Opt-Out of E-Delivery

The rule includes two safeguards for covered individuals who might have different preferences as to how they obtain covered documents. First, the plan must furnish an individual a paper copy of the covered document free of charge, if elected. Second, at a minimum, covered individuals must be provided an option to opt-out of the right to receive the covered documents electronically. Plan administrators may elect to offer additional opt-out elections if they choose.

Special Rule for Annual Combined Notices of Internet Availability

In some cases, the plan may provide one annual combined NOIA for one or more covered documents. The documents eligible to be included in the combined NOIA are:

1. Summary Plan Description;
2. Any covered document required annually;
3. Any covered document not included in 1 or 2 that is authorized by the Secretary of Labor; and
4. Any applicable notice required by the Code if authorized by the Secretary of Labor.

Direct Delivery Via Electronic Mail

In response to feedback from many commentators, the Department added a provision to the rule allowing plans to furnish covered documents to covered individuals via email rather than just providing a website or hyperlink within the NOIA. If documents are sent using this method, the plan administrator is no longer required to send an NOIA, but the body of the email must include similar content and form as noted for the NOIA above.

In conclusion, the first year of implementation of the rule has shown great benefits to plan administrators, especially due to the impacts of COVID-19. However, it is important to note that the rule does not supersede the 2002 safe harbor, rather it offers an alternative option for employers and plan administrators. Those who wish to continue to rely on the 2002 safe harbor for electronic delivery, or to furnish paper documents by hand-delivery or by mail, may continue to do so. For additional information about this rule, refer to the Federal Register – The Daily Journal of the United States Government.

Author: Sarah Mcdonald, CPA | [email protected]