28 May DOL Electronic Disclosure Safe Harbor
May 27, 2020. The Department of Labor (DOL) and the Employee Benefits Security Administration (EBSA) published its long awaited Electronic Disclosure Final Rule (the “Rule”). While the rule will be effective July 26, 2020, the DOL has indicated that plan administrators may begin to rely on the Rule immediately under a non-enforcement provision in the Rule. DOL announced the Rule through a News Release and Fact Sheet summarizing the expected benefit and key provisions of the Rule.
Basic Electronic Delivery Safe Harbor
The retirement plan administrator may provide required notices and documents to plan participants and their beneficiaries electronically unless the plan participant opts out of electronic delivery. Only documents and notices required to be delivered to the plan participant under Title I of ERISA (“covered documents”) can take advantage of the safe harbor. Covered documents include the summary plan description, required annual disclosures and other documents or information authorized by DOL or the Treasury Department. Covered documents do not include documents that must be provided upon request.
Employers may also furnish paper documents by hand-delivery or by mail.
Manner of Electronic Delivery
The plan administrator may use either the email address or the smart phone number assigned to the plan participant by the employer and otherwise used in connection with his or her employment. System checks are required to detect and correct invalid electronic addresses.
The plan administrator may deliver the covered document either by (1) attaching it to or embedding it in the electronic message or (2) providing an electronic message notifying the plan participant how to access the covered document through an identified website or an app (“notice and access”). If the covered document is sent by email, the subject line of the email must read “Disclosure about Your Retirement Plan”, and the message must identify the covered document by name and provide a description of the document.
If plan administrator delivers the covered document through “notice and access”, it must send a Notice of Internet Availability (NOIA) electronically to participants at the time the relevant covered document is posted on the website or app. The relevant document must be easily searchable, easy to read and must remain on the website or app for at least one year or until it is superseded, whichever is later.
One NOIA can be sent for multiple required covered documents to be provided no less often than annually. The plan administrator must send a separate NOIA for a quarterly statement when it is posted.
Initial Paper Notice
In order to be able to deliver covered documents electronically under the safe harbor, the plan administrator must first provide a paper notice to plan participants indicating that (1) some covered documents will be provided electronically, (2) the electronic address to which the covered documents will be provided, (3) the plan participants’ rights to request a paper version of any document and to opt out of electronic delivery. The initial paper notice is required to be sent to new employees as well as existing employees at the time the Rule becomes effective, regardless of whether they are already receiving covered documents electronically.
Departing Employees
The plan administrator must obtain updated email information from departing employees for whom only an employer-provided email address was available.
Elimination of Prior E-Delivery Rules
The Rule supersedes DOL’s special e-disclosure rules set forth in DOL Field Assistance Bulletins (FAB) 2006-03 and 2008-03, as well as Technical Release 2011-03, after an 18-month transition period.
Relation to the CARES Act E-Delivery Provision and the IRS E-Delivery Rules
The Rule does not supersede the CARES Act e-delivery option under EBSA Disaster Relief Notice 2020-01. Therefore, plan administrators may continue to rely on good faith e-disclosure option through the end of the COVID emergency.
The DOL indicated its intent for the Rule to “align” with the IRS e-disclosure rule.
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