New Electronic Disclosure Method For Retirement Plans Approved by DOL
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The Department of Labor (DOL) recently approved a safe harbor method for retirement 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). This new safe harbor method (New Electronic Disclosure Method) has very specific requirements that plan administrators must follow in order to provide participants and beneficiaries with electronic ERISA disclosures.
The New Electronic Disclosure Method is in addition to the prior electronic disclosure option established by the DOL in 2002, but it generally allows electronic disclosure to more individuals.
Unfortunately, the New Electronic Disclosure Method does not apply to health or welfare plans subject to ERISA disclosures. Also, it does not apply to IRS notices that are not ERISA required disclosures (e.g., the Special Tax Notice that is provided prior to an eligible rollover distribution).
The effective date of the New Electronic Disclosure Method will be July 26, 2020, but, in light of the COVID-19 pandemic, the DOL has stated it will not seek enforcement against any plan administrator that relies on the New Electronic Disclosure Method before the effective date. Thus, plan administrators can start relying on these New Electronic Disclosure Methods immediately.
The New Electronic Disclosure Method only applies to “covered individuals” and specific “covered documents”. A covered individual includes a participant, beneficiary, or other individual entitled to these covered documents who provides the plan sponsor or plan administrator with an electronic address. There are specific parameters that apply to how the electronic address is obtained. A covered document is any document or information that the administrator is required to furnish to participants and beneficiaries pursuant to Title I of ERISA, except for any document that must be furnished
only
upon request.
There are two methods of providing the covered documents to the covered individuals: (i) providing the documents on a website and notifying the covered individuals that these are available on such website or (ii) providing the documents in the body of an e-mail or as an attachment to the e-mail that goes directly to the covered individual. However, before using either method, there is an initial notice that must be sent to the participants or beneficiaries via paper. Such initial notification informs the covered individuals that the covered documents will be furnished electronically. Among other things, this initial notice identifies the electronic address that will be used for the individual, includes any instructions needed to access the covered documents, and includes a statement (if applicable) about how long the covered documents will be available on the website.
This New Electronic Disclosure Method has the potential to significantly reduce the cost and burden associated with furnishing many of the recurring and costly ERISA disclosures. It is also very timely considering the COVID-19 pandemic and the issues this is causing
for some plan sponsor and administrators in providing ERISA disclosures during this time. If you would like to use the New Electronic Disclosure Method, please let us know, and we will be happy to work with you to implement the New Electronic Disclosure Method for your plan.
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Jeremiah D. Wood
practices in the firm’s Employee Benefits and Executive Compensation Practice Group. His practice includes experience in the design, implementation, administration and termination of tax-qualified retirement plans (including traditional pension plans, cash balance plans, profit sharing plans, 401(k) plans, and ESOPs), 403(b) plans, nonqualified deferred compensation plans (including 457(b) and 457(f) plans and deferral compensation arrangements for executives) and health and welfare plans.
Disclaimer:
The information included here is provided for general informational purposes only and should not be a substitute for legal advice nor is it intended to be a substitute for legal counsel. For more information or if you have further questions, please contact one of our Attorneys.
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About the Firm
Friday, Eldredge & Clark, LLP is a full-service law firm representing businesses, non-profits, governmental and individual clients in Arkansas and across the United States. We are the largest law firm in Arkansas and one of the oldest — tracing our historical roots back almost 150 years. Our success stems from strong internal leadership and a continuously sharp focus on our clients' needs. We provide clients single-source convenience by offering a wide range of services in more than 50 areas of law. Although the firm is known for its rich history and vast scope of services, it is committed to further growth and development to serve our clients better and put them at the focus of our work - every day.
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