On May 27, 2020, the Department of Labor (DOL) published the final rule providing an additional safe harbor regarding electronic delivery of retirement plan information to participants and beneficiaries. This rule, which becomes effective 60 days from the date published in the Federal Register (effective July 27, 2020), will permit distribution of fiduciary notifications (e.g., summary plan description, blackout notice, QDIA notice, summary annual report etc.) to be sent electronically as a default provided certain conditions are met (see below). The Treasury Department and the IRS have indicated they intend to issue guidance for using electronic delivery for participant notices that are within their jurisdiction, including safe harbor notices and automatic enrollment notices.
The DOL has stated that they will not take enforcement action against plan sponsors who rely on the safe harbor in this final rule before the effective date. Now there is no need for someone to opt in to receive retirement plan notices via e-mail.
To qualify for this safe harbor, the plan administrator must possess valid email addresses, either personal or company issued. The company issued emails need to be business related and not just supplied for the distribution of notices.
The plan administrator can provide participants and beneficiaries with a notice that certain disclosures will be made available on a website, or furnish the disclosures via email (e.g., as an attachment). These notices include any document or information that is required to be provided under ERISA (statements, fee disclosure, summary plan description), but not those that are pursuant to a valid request by a participant or beneficiary.
If the electronic notice directs the participant or beneficiary to a website, then a notice of internet availability must be sent separately annually. It should contain what information will be sent electronically and instructions on how to opt out of the electronic communications. This is not needed if the notice is attached to the e-mail.
This new rule will significantly reduce the expense associated with furnishing many of the recurring, costly disclosures. The new rule will also assist employers and the retirement plan industry with other challenges due to COVID-19, including the logistics of meeting ERISA’s disclosure requirements with an increasingly remote workforce.