DOL issues final electronic delivery regulations

June 25, 2020
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The Department of Labor (“DOL”) recently issued final regulations addressing the electronic delivery of retirement plan notices required by the Employee Retirement Income Security Act of 1974. While not effective until July 27, 2020, the DOL will not take enforcement action if a plan relies on the regulations before that date.

The regulations adopt a “notice and access” framework. This allows a plan administrator to post required notices on a website (or on a mobile application) after providing a notice to participants, explaining the availability of the notices on the website. A summary of the regulations follows:

Covered individuals. The regulations apply to any participant, beneficiary, or alternate payee who provides an email address or a smartphone number, as well as any participant for whom the employer assigns an email address.

Covered documents. The regulations apply to DOL notices only. This includes a summary plan description, summary of material modifications, annual qualified default investment alternative notice, and annual participant fee disclosure. The regulations do not apply to IRS-required notices such as the annual safe harbor notice.

Initial Notice. An initial paper notice must be provided to a participant — for example, when they enroll in the plan — explaining that certain documents will be made available on a website. This notice must include other information, such as: (1) the participant’s email address/smartphone number to be used for future notifications; (2) instructions needed to access the disclosure documents; (3) a statement that the participant has a right to request and obtain a paper version of the document (and explain how to exercise that right); and (4) a statement that the participant has a right to globally opt out of electronic delivery and to receive only paper versions of disclosures (and explain how to exercise that right).

Notice of Internet Availability. A Notice of Internet Availability (NOIA) must be provided when a document is made available on the website. In certain cases, an annual NOIA can be provided for multiple documents to be made available on the website. The NOIA must include specific information about the available document, as well as instructions on how to access the document. The NOIA, like the initial notice, must include statements about a participant being able to receive paper versions of the documents and the right to opt out of electronic delivery of documents.

Website standards. The website used for the disclosures must meet specific standards. For example, the document presented on the website must be in a widely available format that allows a participant to read the document online or to print the document on paper. The online document must also be searchable by numbers, letters, and words.

Right to receive paper copies/right to opt out of electronic delivery. Procedures must be developed to provide paper copies of the documents if a participant elects to receive a specific document in paper and/or elects to globally opt out of electronic delivery. In addition, the electronic delivery system must ensure that the participant has received the NOIA. If the plan administrator becomes aware that the provided email address or mobile phone number is inoperable or not valid, then the plan administrator must send the NOIA to a different electronic address/mobile phone number. Alternatively, the plan administrator can treat the participant as having elected out of electronic delivery and provide the document in paper form.

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Union Bank intends to work with plan sponsors to determine how to implement the electronic disclosure regulations to achieve efficiencies and cost savings. If you have questions about the regulations, please contact the Union Bank Relationship Manager assigned to your plan.

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