Highlights

  • The U.S. Department of Labor (DOL) announced final rules to allow plan sponsors to post retirement plan disclosures online or deliver them to plan participants by email.
  • The final rules are expected to significantly reduce the costs related to providing recurring and expensive disclosures as well as improve the effectiveness of the disclosures themselves.
  • The new safe harbor gives retirement plans another way to comply with disclosure requirements set forth in the Employee Retirement Income Security Act of 1974 (ERISA).

The U.S. Department of Labor (DOL) announced final rules to allow plan sponsors to post retirement plan disclosures online or deliver them to plan participants by email. The final rules, published on May 27, 2020, are expected to significantly reduce the costs related to providing recurring and expensive disclosures as well as improve the effectiveness of the disclosures themselves. The new safe harbor does not replace the current safe harbor rules governing electronic disclosure of documents that were issued in 2002, but instead gives retirement plans another way to comply with disclosure requirements set forth in the Employee Retirement Income Security Act of 1974 (ERISA).

The final rules closely mirror proposed rules issued in October and allow plan administrators to provide certain disclosures to covered individuals through a website or directly via email provided they meet specific requirements. The following is an overview of the new rules.

Covered Individuals and Electronic Addresses

Unlike the current electronic disclosure safe harbor, the final rules apply to only one category of covered individuals and no affirmative consent by such individuals is required. A covered individual is any participant, beneficiary or other individual entitled to documents under ERISA who provides an electronic address. An electronic address can be an email address or the phone number for a smartphone or other internet-connected mobile device. If an employer assigns an employee an electronic address, then the employee is deemed to have provided an electronic address. If a covered individual terminates employment with the employer, the plan administrator must take reasonable measures to ensure that the covered individual's electronic address is still accurate or obtain a new electronic address.

Covered Documents

The final rules provide that any documents or information that must be furnished by a pension plan under Title I of ERISA, including 401(k) plans and employee stock ownership plans, may be distributed electronically, except for any document that must be furnished only upon request. For example, the new safe harbor can apply to the summary plan descriptions and blackout notices. In contrast, the new safe harbor would not apply to any plan documents that an eligible person requests in writing.

Additionally, the new rules do not apply to employee welfare benefit plans, such as plans providing group health or disability benefits.

Initial Notice Requirements

Prior to first relying on the new safe harbor, a plan administrator must furnish to each individual to be covered by the safe harbor an initial notice. This initial notice must:

  • inform the individual that electronic delivery will be the default method of delivery
  • provide identification of the of the electronic address that will be used
  • provide instructions necessary to access the covered documents
  • include a statement cautioning the individual that a covered document is not required to be available on the website for more than one year or after it has been superseded by a new version of the covered document, if later
  • inform the individual that he or she has the right to request and obtain a paper version of a covered document, free of charge, and an explanation of how to exercise those rights
  • inform the individual that he or she has the right to completely opt out of receiving covered documents electronically, and an explanation of how to exercise those rights be written in a manner that would be understood by the average plan participant

"Notice of Internet Availability" Requirements

After providing the initial notice, a plan administrator must furnish to each covered individual a "notice of internet availability" for each covered document, though for certain documents a single consolidated notice of internet availability can be issued. A notice of internet availability that is not a combined notice must be furnished at the time the covered document is made available online.

The notice of internet availability must contain the following information, written in a manner that would be understood by the average plan participant:

  • a prominent statement that reads "Disclosure About Your Retirement Plan"
  • a statement that reads "Important information about your retirement plan is available at the website address below. Please review this information."
  • identification of the covered document by name and a brief description if identification by name alone would not convey its nature
  • the website or hyperlink where the covered document is available, sufficiently specific to make the covered document readily accessible (can be satisfied by providing a link directly to the covered document or to a login page that upon login immediately provides a prominent link to the covered document)
  • a statement that the covered individual has the right to receive a paper version of the covered document, free of charge, and an explanation of how to exercise this right
  • a statement that the covered individual has the right to opt out of receiving covered documents electronically and an explanation of how to exercise this right
  • a statement cautioning the covered individual that a covered document is not required to be available on the website for more than one year or after it has been superseded by a new version of the covered document, if later
  • a telephone number to contact the plan administrator or other designated plan representative

The notice of internet availability must be sent electronically to the provided electronic address and contain only the content described above, though non-misleading pictures, logos or other designs are permitted. As long as it is not inaccurate or misleading, the notice may include a statement as to whether or not any action is required of the covered individual in response to the covered document and, if applicable, how to take such action. The notice of internet availability must also generally be sent separately from any other documents or disclosures.

Requirements for Consolidated Notice of Internet Availability

The new rules permit a plan administrator to furnish one notice of internet availability with respect to the four categories of documents and information listed below:

  • a summary plan description
  • a covered document or information that is required to be provided annually and does not require action by the individual by a specific deadline
  • a covered document authorized by the Secretary of Labor, in writing, by regulation or otherwise in compliance with Section 110 of the Act
  • any notice required by the Internal Revenue Code if authorized by the Secretary of the Treasury in writing

A consolidated notice must satisfy the notice of internet availability content requirements described above. A consolidated notice must be furnished each plan year, and if a combined notice was furnished in the prior plan year, a new combined notice must be provided no later than 14 months following the date that the prior year's combined notice was furnished.

Website Requirements

The website providing access to the covered documents must meet certain requirements to comply with the new safe harbor. Specifically, a plan administrator must take measures reasonably calculated to ensure that:

  • the covered document is available on the website no later than the date on which the covered document must be furnished under ERISA
  • the covered document remains on the website for at least one year, or until it is superseded by a new version of the covered document if later
  • the website presents the covered document in a manner that can be understood by the average plan participant
  • the covered document is presented on the website in a common format or formats that can be both read online and printed on paper and that can be downloaded and permanently retained in electronic format (such as PDF)
  • the covered document can be searched electronically by numbers, letters or words
  • the website protects the confidentiality of personal information relating to any covered individual

A website means 1) an internet website or 2) any other internet or electronic-based information repository, including a mobile application to which an individual has been granted reasonable access.

Disclosures Via Email Systems

A plan administrator may also provide covered documents to covered individuals by sending the covered document to an email address, provided they take measures reasonably calculated to protect the covered individuals personal information. Any covered document provided via email, must be sent to the covered individual no later than the date on which the covered document must be furnished under ERISA.

If a covered document is provided via email, a plan administrator is not required to provide a notice of internet availability. However, the email must 1) include the covered document as an attachment or in the body of the email, 2) include "Disclosure About Your Retirement Plan" in the subject line and 3) be written in a manner that would be understood by the average plan participant.

If the covered document is included as an attachment, the email must include:

  • identification of the covered document by name and a brief description if identification by name alone would not convey its nature
  • a statement that the covered individual has the right to receive a paper version of the covered document, free of charge, and an explanation of how to exercise this right
  • a statement that the covered individual has the right to opt out of receiving covered documents electronically and an explanation of how to exercise this right
  • a telephone number to contact the plan administrator or other designated plan representative

The covered document must continue to:

  • be written in a manner that would be understood by the average plan participant
  • be in a common format or formats that can be both read online and printed on paper and that can be downloaded and permanently retained in electronic format (such as PDF)
  • be searchable electronically by numbers, letters or words

Plan administrators must continue to comply with 1) the requirements related to providing paper copies of documents or the covered individuals right to opt out of electronic disclosures, 2) the requirement to provide an initial notification of default electronic delivery, except for the cautionary statement, and 3) reasonable measures requirement to ensure that a terminated covered individual's electronic address is still accurate or obtain a new electronic address.

Effective Date

Under the final rules, the new alternative safe harbor's effective date is July 27, 2020. However, the DOL stated that it will not take enforcement action against a plan sponsor that relies on this alternative safe harbor before the effective date.


Article originally published on 27 May 2020

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.