Last fall the Department of Labor (DOL) proposed regulations that address the electronic delivery of retirement plan notices. These regulations, which provide plan sponsors with many more circumstances where they can electronically deliver information, were finalized recently. It will go into effect 60 days following the May 21 publication in the Federal Register.
These new regulations will give employers more efficient and less expensive ways to send plan participants information. And, now with many employees working remotely, many traditional methods of delivering information are not currently available to employers.
While the final regulations leave the 2002 opt-in approach in tact, the new regulations provide a “notice and access” method of electronic delivery for retirement plan sponsors will provide an opt out alternative. Under the new regulations, eligible required recipients will receive notice by email or text that plan-related documents have been posted to a website for their review. If an employee opts out of this method of delivery, the plan sponsor would be required to provide a paper version of the documents.
The ruling includes provisions for the following:
- The DOL will continue to require that a plan administrator possess an electronic address that enables electronic communication with a covered individual as a condition of reliance of the safe harbor. This can be a company provided address or a personal electronic address provided by the employee.
- Not everything has gone digital. The initial notice must be given on paper to let plan participants know that some or all of the plan’s covered documents will be furnished electronically to an electronic address. The plan sponsor is also required to let participants know that they have the right to request and obtain a paper version of covered documents and of the right to opt out of receiving covered documents electronically, provided free of charge, along with an explanation of how to exercise these rights.
- Notice of internet availability must be provided when a covered document is posted on the website that is written in plain language and easy to understand by an average plan participant.
- The plan sponsor must have an avenue in place to alert them if a covered individual’s electronic address has become invalid or inoperable. In that case, the plan sponsor must promptly take reasonable steps to cure the problem or must treat that participant as having opted out of electronic delivery and provide a paper version.
Plan sponsors should consider taking the following actions:
- Carefully consider if the “notice and access” method would be beneficial to plan participants or if the current notice delivery methods are working sufficiently.
- Work with service provider or recordkeeper to verify they are capable of monitoring electronic delivery and can identify invalid e-mail addresses.
- Ensure participants have access to the website where the required notices are posted. If an intranet or other internal communication is used, an alternative method of delivery would need to be established for terminated participants and beneficiaries.
You can read the final rule in its entirety here. BerganKDV has a team of advisors to help plan sponsors understand the complex world of retirement plans by helping with 401(k) design, fiduciary governance, benchmarking 401(k) fees, educating participants and investment due diligence. Want to learn more about what we can do for you? Start here.
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