DOL Electronic Disclosure Safe Harbor
The Department of Labor recently issued final regulations on two new safe harbor methods that can be used for electronic delivery of required retirement plan notices. The final regulations are effective July 27, 2020 but could have been relied upon prior to that date. The two new options, which are in addition to currently available alternatives for electronic deliver, are “Notice-and-Access” and “Direct Email Delivery.”
Plan sponsors can post covered documents on a website if the “covered individual” if provided with a notice of internet availability (NOIA) at the covered individual’s email address each time a document is posted.
Direct Email Delivery
The Plan sponsor can provide covered documents directly to a covered individual’s email address with a subject line “Disclosure About Your Retirement Plan.” If the document is provided with an attachment rather than in the body of the email a NOIA must also be provided as in the Notice-and-Access option.
“Covered documents” include any documents and information required to be provided under Title I of ERISA other than those only required to be provided on request, e.g. plan document, latest Form 5500, etc.
A “covered individual” includes a participant, beneficiary, alternate payees who provide their electronic address.
Before using either of the two new safe harbor methods the plan sponsor must deliver to each covered individual an initial notice in paper form advising of the use of electronic delivery unless the covered individual opts out. The initial notice must include:
- The electronic address to be used for the individual
- The period during which the posted document must be available
- Instructions necessary to access the document
- A statement that the document can be provided in paper form at no charge
- The right of the individual to opt out of electronic notice
In order to protect the covered individuals’ privacy regarding confidential information the plan sponsor must:
- Ensure that covered documents are provided timely
- Covered documents are provided in easily understood language and can be searched by numbers and letters
- Covered documents remain available for at least one year of later if replaced by a subsequent version
- The website protects the confidentiality of personal information
- The electronic delivery system must alert the plan sponsor of invalid or inoperable electronic addresses who must take reasonable steps to correct inoperable or invalid electronic addresses.