Do You Send Participant Notices via Email? Should you?
The number of notices and disclosures required to retirement plan participants has increased while methods to access information changed drastically. Many people receive their news and information on electronic devices through apps and social media. What remains the same is the Department of Labor’s (DOL’s) guidance about permissible methods to provide notices electronically. There is a disconnect between how people are accustomed to receiving information (electronically) and what is permissible under ERISA.
What Disclosures May be Distributed Electronically under the DOL Safe Harbor?
A comprehensive guidance – and safe for plan fiduciaries – is the safe harbor for electronic delivery provided in DOL regulations. The safe harbor includes the documents required to be furnished by ERISA including, but not limited to:
• Summary plan description
• Summary of material modification
• Summary annual report
• Individual benefit statements
• Participant fee disclosure
• Investment-related information required for ERISA section 404(c) compliance
• Qualified default investment alternative (QDIA) notices (both initial and annual)
• Information regarding participant loans
• Any information that must be provided upon request by participants/beneficiaries
The list does not include safe harbor plan notice. That annual notice falls under the jurisdiction of the IRS, not the DOL, and thus is not included in the DOL’s safe harbor.
Who May Receive Documents Electronically?
There are two categories of individuals who may receive disclosures electronically:
1. Participants who work at a computer
2. Participants that do not work at a computer may still receive emailed notices provided that:
• the participant consents
• prior to consent, the participant is given a summary of documents and informed that consent is revocable
How Must Employers Distribute Notices Electronically under the Safe Harbor?
Employers must be conscious of how they provide required disclosures. Many use their company website to post them. While this is allowable, the following additional rules must be met:
• The document must be easily accessible from the company website’s home page
• Access should be restricted by password
• A prominent notice should appear on the home page stating that the document contains important information regarding plan rights
• Notice of each posting must be provided
• Documents should remain on the website for a reasonable period of time
Regardless of the specific electronic method employed, plan sponsors must ensure confidentiality and that delivery results in actual document receipt.
Should Employers Consider Electronic Distribution of Notices?
Absolutely! Technology is inescapably pervading every facet of our lives. While there are a few requirements to abide by, there are vast benefits to electronic delivery including cost savings (no more paper/postage to purchase, labor savings, etc.), environmental consciousness, quicker dissemination of information, higher likelihood of readership and overall more efficient retirement plan operation. Ask your plan advisor to add “electronic participant notice distribution” to your next retirement committee meeting agenda.
~Joel Shapiro, JD, LLM
About the Author, Joel Shapiro, JD, LLM, Senior Vice President, ERISA Compliance
As an ERISA specialist and member of the Senior Management team, Joel leads the Retirement Service and Consulting department. He works to ensure exceptional client experiences and ensure that plan sponsors stay fully informed on all legislative and regulatory matters. Joel came to RPAG from Hewitt Associates with over 10 years of technical experience related to 401(k) plans and ERISA issues. Prior to this, he practiced law with Fennemore Craig in Phoenix. Joel earned his Bachelor of Arts from Tufts University and his Juris Doctor from Washington College of Law at the American University. He also earned a Master of Laws in taxation from Georgetown University Law Center. Joel is a frequent speaker at industry events, such as The Society for Human Resource Management.
The “Retirement Report” is published monthly by Retirement Plan Advisory Group’s marketing team. This material is intended for informational purposes only and should not be construed as legal advice and is not intended to replace the advice of a qualified attorney, tax adviser, investment professional or insurance agent.
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