Final Department of Labor (DOL) e-delivery regulations will make it significantly easier for retirement plan administrators to deliver certain notices to participants and beneficiaries via internet websites, mobile apps and email. After receiving initial notice about how to access the documents, participants and beneficiaries can opt out of electronic delivery altogether, but even those who don’t opt out can request paper versions of specific documents. The rule takes effect July 27, but plan administrators may rely on it earlier. The new rule applies only to retirement plans (but DOL may address e-delivery rules for health and welfare plans in the future).
The “notice-and-access” safe harbor method for e-delivery remains largely intact in the final rule. However, in response to comments on the proposal, DOL made a number of revisions in the final rule, including:
No model NOIA. The final rule does not provide a model NOIA. Commenters on the proposed rule overwhelmingly said that the safe harbor requirements were sufficiently specific, and any model would likely be too rigid to accommodate each employer’s circumstances.
The final regulation allows two safe harbor methods of electronic delivery:
Employers can choose which (if any) disclosures to provide using either safe harbor method and can continue distributing paper documents for any or all disclosures. Participants can opt out of electronic delivery altogether or request a paper version of a particular disclosure.
DOL first made an e-delivery safe harbor for ERISA retirement plan disclosures available in 2002 regulations. The 2002 safe harbor applies only for participants who can effectively access electronic documents at work, as well as participants and beneficiaries who have affirmatively consented to receive disclosures electronically. The new rule doesn’t change any aspect of the 2002 safe harbor, which remains available going forward.
Certain details of the new safe harbor apply to both the notice-and-access and email delivery methods.
The safe harbor is available for the delivery of “covered documents.” A covered document is any retirement plan disclosure required by Title I of ERISA, except documents that must be furnished only on request, which administrators must continue to provide on paper. For details on notices and documents covered by ERISA Title I, see DOL’s Reporting and Disclosure Guide for Employee Benefit Plans.
The safe harbor can be used only for “covered individuals” — participants, beneficiaries and others entitled to covered documents for whom the employer, sponsor or plan administrator has an electronic address, such as a personal or work email address. Smartphone numbers also may be used, but only for the notice-and-access method, and the plan administrator must confirm a number is capable of receiving text messages.
The rule allows flexibility in obtaining an electronic address. For example, plan administrators can use an address the employee provided on a new-hire application, in plan enrollment paperwork or when registering to access plan information online. Administrators also can use an electronic address that the employer assigned to an employee, but only if that address will be used for other employment-related purposes beyond delivering covered documents. However, employers cannot assign electronic addresses to spouses and other beneficiaries, who must affirmatively provide an electronic address. Administrators and third-party service providers may not assign an address to any participant or beneficiary — for example, by using a commercial locator service to obtain an individual’s personal email address or setting up a Gmail account for that person.
Transition. DOL will permit plan administrators to rely in good faith on lists of electronic addresses that already exist as of the rule’s effective date.
Severance from employment. The rule allows plan administrators to continue using the safe harbor after employees leave employment with the plan sponsor. However, if a former employee had been receiving covered documents at an employer-assigned electronic address rather than a personal one, the administrator must “take measures reasonably calculated to ensure the continued accuracy and availability” of the terminated employee’s electronic address or obtain a new electronic address when the termination occurs.
Invalid electronic addresses. The e-delivery system must alert the plan administrator to an invalid electronic address. Once aware of a bad electronic address (for example, when an email is returned as undeliverable), the administrator must promptly fix the problem or take action as if the covered individual had opted out of e-delivery. The regulation suggests that the administrator could fix the problem by using a secondary electronic address on file or obtaining a new electronic address. However, other corrective actions may be acceptable, depending on the particular facts and circumstances of a failed delivery. If e-delivery isn’t possible, the plan administrator must furnish a paper version of the document as soon as reasonably practicable. Paper delivery will remain in effect until the administrator obtains a valid electronic address to resume sending electronic documents.
Plan administrators need to have reasonable procedures for participants and beneficiaries to obtain paper copies of covered disclosures and to opt out of electronic delivery for all covered documents. The administrator will have to supply paper copies of all future documents to participants who opt out, unless and until they elect e-delivery. The administrator must provide only one paper copy of a disclosure free of charge, unless plan terms or other ERISA rules require otherwise. The administrator cannot charge a fee for participants to opt out.
Before relying on the new safe harbor, a plan administrator must send all participants and beneficiaries an initial paper notice explaining the new e-delivery method. The initial notice is required before using either the notice-and-access method or email to e-deliver documents. Plan administrators cannot send the initial notice electronically, even to participants already receiving electronic disclosures under the 2002 safe harbor.
The initial notice must be written in a manner calculated to be understood by the average plan participant and must contain:
Administrators may include the initial notice in new-hire packets or other standard enrollment materials.
Plan administrators using the notice-and-access method must meet additional requirements for providing NOIAs and maintaining websites.
A plan administrator must furnish an NOIA to each covered individual when a disclosure is newly available on the administrator’s website or other platform.
Timing. The NOIA is due at the same time the disclosure is due. For example, a plan administrator must provide a summary of material modifications (SMM) to participants within 210 days after the close of the plan year in which a plan’s terms were significantly changed. Plan administrators that want to post the SMM on a website have to provide the NOIA — and make the SMM available on the website — by that deadline. However, a special timing rule applies if the administrator provides a combined NOIA (see “Combining notices of internet availability” below).
Content. The NOIA must include the following information:
The NOIA also can include an optional statement about any action that individuals are invited or required to take in response to the document and instructions on how to take such action. Alternatively, the notice may state that no action is required, if such statement is not inaccurate or misleading.
Form and manner of providing notice. The NOIA must:
A plan administrator generally must provide a separate NOIA for each required disclosure. But plan administrators can furnish a single combined notice for all or some of the following types of documents:
Employers may not give a combined NOIA for any disclosures besides the ones listed above.
Timing of combined notice. Covered individuals must receive a combined NOIA once per plan year. The plan administrator has 14 months after the date of the prior plan year’s combined notice to provide a new one. However, providing a combined notice doesn’t change the deadline for making a disclosure available on the website. That deadline remains the due date for furnishing the document by law.
Plan administrators are responsible for establishing and maintaining the website used for document delivery. The rule takes an expansive view of the term website, including internet websites and other electronic information repositories like mobile apps. The administrator can retain third-party service providers to establish and maintain the website, but still has fiduciary responsibility for selecting and monitoring the service providers. The administrator must ensure each document is:
Protecting participant data. The administrator must take measures to ensure that the website protects the confidentiality of personal information about any covered individual. The rule does not prescribe specific, technical requirements for satisfying this requirement. The preamble to the final rule explains that this was intentional, given the variety of technologies, software and data used by retirement plans.
Technology mishaps. If the website or other platform becomes temporarily unavailable due to technical maintenance or other unforeseeable events or circumstances beyond a plan administrator’s control, the plan administrator will not violate its disclosure obligations if it meets both of these conditions:
Plan administrators may choose to send some or all covered documents directly via email. Sending documents by text message to a smartphone number is not allowed. Plan administrators may send some documents by email and use the notice-and-access method for others. (For instance, a plan sponsor may prefer to send benefit statements by email, while posting other documents like SPDs on a website.) The plan administrator must also take measures to protect the confidentiality of the covered individual’s personal information.
Timing. Documents delivered by email must be sent by the date the disclosure is due.
Content of email. The email delivering the document must be written in a manner reasonably calculated to be understood by the average plan participant and must include the following information:
Standards for covered document. The covered document may be contained in an attachment to the email or included within the text of the email itself. The document must also be:
Combining covered documents. Although the regulation doesn’t address whether a single email can deliver multiple disclosures, the preamble confirms that the plan administrator may apply the same standards that would apply to paper disclosures. That is, if separate delivery is not required and the timing requirements align, plan administrators may send multiple documents via a single “envelope” email.
The final rule takes effect July 27. The proposal distinguished the effective date from the applicability date, which would have been the first day of the calendar year after the effective date. The final rule eliminates this distinction and is both effective and applicable on July 27.
Earlier reliance during COVID-19 pandemic. Although the rule is not effective until July 27, DOL will not take any enforcement action against a plan administrator that relies on the new safe harbor before that date. DOL’s nonenforcement policy aims to provide flexibility to administrators struggling to satisfy their disclosure obligations during the COVID-19 pandemic. Before relying on the safe harbor, however, plan administrators still have to send an initial notice — on paper — explaining the plan’s e-delivery system.
Phaseout of existing subregulatory guidance. For 18 months after the final rule’s effective date, plan administrators can continue to rely on the following pieces of subregulatory guidance: