On May 27, 2020, the Department of Labor (DOL) adopted the Default Electronic Disclosure by Employee Pension Benefit Plans Under ERISA (“Final Regs”). The Final Regs are a new, additional safe harbor for plan administrators to use electronic media, as a default, to furnish information to participants and beneficiaries of plans subject to the Employee Retirement Income Security Act of 1974 (ERISA). These Final Regs do not replace the original electronic 2002 Regs but provide additional electronic disclosure availability for plan administrators. The Final Regs are effective July 27, 2020, and plan administrators can begin using the new safe harbor immediately. (Note, health and welfare plan disclosures are excluded from the Final Regs.)
2002 Regs
Participants who use email as an integral part of their work functions (or “wired at work” employees) may receive electronic disclosures without affirmative consent, provided that the employer notifies each recipient when the information is distributed of the availability and significance of the document, their right to request a paper version of the document, and some additional technical requirements.
Participants, beneficiaries, or other individuals who are not “wired at work” may also receive electronic disclosures if they affirmatively consent.
Final Regs
The Final Regs provide for two electronic delivery options for plan administrators:
- Option 1: post covered documents on a plan-related website; or
- Option 2: email covered documents directly to covered individuals.
Regardless of the approach, plan administrators must first provide covered individuals, including “wired at work” employees, with a paper Initial Notification explaining that some or all covered documents will be furnished electronically, and the covered individuals have the right to opt out of electronic delivery and instead receive a paper version — free of charge — of any covered document (and how to exercise such right).
This Initial Notification is required both before a plan administrator can rely on the safe harbor, and when new employees are hired.
OPTION 1: PLAN-RELATED WEBSITE DELIVERY
Initial Notification
Under Option 1, the Initial Notification explained above must include additional information regarding internet availability, such as:
- Instructions on how to access covered documents; and
- A cautionary statement that the covered document is not required to be available for more than one year, or if applicable, after it is superseded by a subsequent version.
“Notice and Access” Approach
Covered individuals must be notified that a covered document is made available on a plan-related website There is no requirement that participants are “wired at work” employees. Further, there is no requirement that participants affirmatively consent to electronic delivery.
Notice of Internet Availability (NOIA)
A notice is required for each covered document provided, generally at the time the document is posted on the website. The notice must be sent to the participant’s provided email address and should be easily understood by the average plan participant.
The Notice must be clear, not misleading, and include ONLY the following details:
- A subject line that reads, “Disclosure about Your Retirement Plan”;
- A statement within the body of the email that reads, “Important information about your retirement plan is now available. Please review this information”;
- The name of the covered document, and a brief description of the covered document if name does not convey the nature of the covered document;
- A direct hyperlink to the covered document, or a website address where the covered document is available unless the covered document is attached;
- A statement detailing the right to request and obtain a paper version of the covered document — free of charge — and how to exercise such right;
- A statement detailing the right to opt-out of receiving covered documents electronically, and an explanation of how to exercise such right;
- A phone number to contact the plan administrator or representative of the plan; and
- A cautionary statement that the covered document is not required to be available on the website for more than one year or, if later, after it is superseded by a subsequent version.
A single, combined NOIA can be used if provided at least once within a 14-month period to announce the availability of the following disclosures:
- Summary Plan Description and/or Summary of Material Modifications
- Summary Annual Report and/or Annual Funding Notice
- QDIA Notice
- 404a-5 and/or 404(c) Disclosure
- Automatic Contribution Notice
- Annual Benefit Statement (Quarterly Benefit Statements may not be included)
OPTION 2: EMAIL DELIVERY
Plan administrators may furnish covered documents in the body of the email or as an email attachment. The email must include all of the information required in the NOIA, as described above, with the exception of information on where and how long the covered documents will be available online.
ADDITIONAL OBLIGATIONS OF PLAN ADMINISTRATORS
Website Standards
The plan administrator must ensure the website used to post the covered documents actually exists, and that website takes reasonably calculated measures to protect the security and privacy of the covered individuals’ information.
Plan administrators are permitted to use an app to deliver covered documents within the Final Regs.
The plan administrator must ensure that the covered document:
- Is searchable and available no later than the date it is required to be furnished;
- Remains available until it is superseded, but in no event for less than one year;
- Is written in a manner that can be understood by the average plan participant; and
- Is maintained in a widely available format that allows the document to be permanently retained (such as in PDF form).
Check for Invalid Email Addresses
Plan administrators must have a system that alerts them of invalid or inoperable email addresses. In addition, plan administrators should have established procedures to resolve those invalid email addresses, such as sending the notice to a secondary email address, obtaining a new email address, or treating the individual as if he/she opted out of electronic delivery.
Check at Severance from Employment
The plan administrator must take calculated measures to ensure the continued accuracy of a participant’s email address following a severance from employment, or to obtain a new email address that enables receipt of the covered documents following the severance.
Glossary
“Covered Individuals”: Any participant, beneficiary, or other individual entitled to covered documents and who provides the employer, plan sponsor, or plan administrator with an email address at which the individual may receive an NOIA.
If an employer assigns an email address to an employee for employment-related purposes, the employee is treated as if he/she provided the address.
Electronic confirmation of the covered individual’s ability to access the email he/she provided is not required.
“Covered Documents”: Any document or information that the plan administrator is required to furnish participants and beneficiaries under Title I of ERISA, except for any document that must be furnished only upon request.
