By : Scott M. Cloud, MBA, CPC
During the past six months there’s been a flurry of retirement plan regulatory/legislative changes between the SECURE Act and CARES Act (and subsequent coronavirus-related relief), and on Thursday, May 21st the DOL announced the final rules enabling required plan notifications, disclosures, and other materials to be delivered electronically (E-Delivery) to all participants by default.
All 152 pages of the final rule, titled Default Electronic Disclosure by Employee Pension Benefit Plans under ERISA, can be viewed here, but following are the highlights:
- The final rule goes into effect on July 20th (60 days after its May 21st publication in the Federal Register).
- Perhaps the most significant part of the final rule is that – by default – plan fiduciaries will now be able to deliver required plan materials to an employee’s personal email address if that address was provided by the employee during a job application process or in other human resources documents. (Previously, plan fiduciaries could deliver plan materials to a work email address by default but only to a personal email address if the employee completed a plan-specific form or authorization consenting to delivery at the personal email address.)
- For all employees without a work email address, plan fiduciaries must still distribute an initial notice on paper 1) informing employees that they’ll be receiving required plan materials at a personal email address (if they’ve provided one to the employer) and including instructions for how to provide a personal email address through the plan’s user site or otherwise (if the plan fiduciaries have no email address for the employee), and 2) letting the employee know that they have the right to opt out of electronic delivery altogether and request that plan materials instead be provided on paper at no cost.
- Employees without any email address must be provided with ongoing notifications on paper letting them know how to access plan materials online. However, plan fiduciaries are not required to deliver the actual plan materials on paper unless the employee requests paper materials at no cost. (This will cut down on paper significantly but won’t completely eliminate it.)
- An employee’s decision to receive plan materials electronically or on paper is not permanent and can be changed at any time.
Put another way:
- For employees with a work email address the new rules have no effect (since it’s already an acceptable default method of delivery).
- For employees without a work email address but with a personal email address that they’ve provided to the plan fiduciaries, ongoing plan materials can be delivered to that personal email address unless/until the employee requests that plan materials be provided on paper.
- For employees for whom the plan fiduciaries have no email address, the employee must receive ongoing paper notifications with instructions for accessing plan materials online, and the employee can request that all plan materials be provided on paper at no cost.
The new rule has been well-received by the retirement plan services community and is expected to reduce both plan operational costs and administrative burden/complexity for plan sponsors and service providers (particularly those that offer 3(16) fiduciary services).
Over the coming weeks TRPC will be updating our employee enrollment and notification/disclosure procedures to comply with the new rules. In the meantime, please let us know if you have questions