A new rule published today by the U.S. Department of Labor today will permit private-sector employers to post retirement plan information online or send by email.
The rule allows employers to deliver disclosures to plan participants primarily electronically, which will reduce printing, mailing, and related plan costs by an estimated $3.2 billion over the next decade, the DOL said in a news release.
The rule will also make disclosures more readily accessible and useful for participants, but preserve the rights of those who prefer paper disclosures.
Industry groups hailed the decision as a common-sense victory for retirement savers.
“People are conducting business all the time over their phones and through other technologies," said Susan Neely, president and CEO of the American Council of Life Insurers. "Digital capabilities are more important all the time and that’s been amplified by COVID-19. It only makes sense for people to have access to information about their retirement plans when they want it, wherever they are.
On Oct. 22, 2019, the Department’s Employee Benefits Security Administration (EBSA) issued a proposed rule to allow plan administrators that satisfy certain conditions to notify retirement plan participants that required disclosures, such as a plan’s summary plan description, will be posted on a website. At the same time, participants can choose to opt out of electronic delivery or request paper copies of disclosures.
Following the Department’s proposal, plan sponsors and fiduciaries, plan service and investment providers, retirement plan and participant representatives, and other interested parties submitted several hundred written comments.
The final rule allows retirement plan administrators to furnish certain required disclosures using the proposed “notice-and-access” model. Retirement plan administrators also have the option to use email to send disclosures directly to participants.
These administrators must notify plan participants about the online disclosures, provide information on how to access the disclosures, and inform participants of their rights to request paper or opt out completely. The new rule also includes additional protections for retirement savers, such as accessibility and readability standards for online disclosures and system checks for invalid electronic addresses.
“This rule is an outstanding example of how commonsense deregulatory efforts can save billions of dollars,” said U.S. Secretary of Labor Eugene Scalia. “The rule will rely on widely available technology to keep workers and retirees informed about their plans, while still preserving the option to receive retirement information by mail."
This rule also may help some employers and the retirement plan industry in their economic recovery from the disruption caused by the coronavirus pandemic, the DOL said.
Many retirement plan representatives and their service providers, for example, have indicated that they are experiencing increased difficulties and, in some cases, a present inability to furnish ERISA disclosures in paper form. Enhanced electronic delivery offers an immediate solution to some of these problems.