November 4, 2019

DOL Disclosures: Relief Coming?

We do not frequently report on non-reliant proposed regulations, but a newly issued set may portend some relief for employer/plan sponsors. 

You may recall that the Department of Labor’s Employee Benefit Security Administration (EBSA) has been looking at ways to streamline employee benefit communications.  By way of proposed rules issued on October 23, 2019, EBSA is proposing a new safe harbor for electronic distribution of certain retirement and pension plan communications.

As background, ERISA imposes a variety of notice obligations upon both welfare benefit and retirement plans. In 2002, the DOL issued final regulations that provide a safe harbor methodology for disclosure of required plan communications through the use of electronic media.  In a nutshell, electronic distribution can only be used in two instances. It can be used for employees who have regular employment-based access to the employer’s electronic system.  It can also be used for participants and beneficiaries who affirmatively consent to the electronic distribution and meet other requirements.  In both instances, individuals have the right to request a paper copy of the document at no cost.

Given the increased availability and use of various electronic means, the DOL is proposing an additional safe harbor.  This safe harbor would allow a participant, beneficiary, or other individual entitled to receive plan communications by providing his/her email address or smartphone number to the employer, plan sponsor, or administrator.  This safe harbor applies to a much broader group of individuals than the prior group who were required to have employment-based access to the employer’s computer system, and it would not require affirmative consent by the individual.  The proposed safe harbor, like the existing safe harbor, would allow an individual to opt out of some or all of the electronic communications.  Further, it would allow all individuals to request a free paper copy of the document(s).

The safe harbor “notice-and-access” method of electronic delivery would allow plan sponsors/administrators to post required information online through a website (any personal information would need to be protected), and then notify participants by email or smartphone number of the availability of the document for them to access.  The notice of availability provided to individuals must be written in a manner intended to be understood by the average plan participant, and furnished separately from any other document.  The content of the notice must contain a description of the document posted online, the website address for accessing the document, as well as instructions for requesting a free paper copy, and how to opt out of receiving electronic delivery of plan communications and electing paper copies instead.  The notice of availability would need to be provided each time a required plan disclosure is posted to the website.  Special rules apply when combining multiple plan disclosures.

If an employer/plan sponsor were to take advantage of the safe harbor, it would have to provide an initial explanation of the electronic access to documents prior to initiating the methodology.  This notice must be provided in hard copy to affected individuals, and include a statement of the right to request no-cost paper versions of the documents, as well as how to opt out of receiving the documents electronically,

In their current form, these regulations only apply to pension and retirement plan communications, such as summary plan descriptions, summaries of material modification, summary annual reports, benefit statements and black-out notices.  Although, EBSA leaves open a placeholder to add electronic distribution of welfare benefit plan communications at a later date.

The regulations also request additional comments and thoughts about how the various benefit communications could be further streamlined.  Comments on these proposed rules can be submitted through November 22, 2019.  We’ll keep you advised of future developments.    


The information contained in this article is provided as general guidance and may be affected by changes in law or regulation. This article is not intended to replace or substitute for accounting or other professional advice. Please consult a CBIZ professional. This information is provided as-is with no warranties of any kind. CBIZ shall not be liable for any damages whatsoever in connection with its use and assumes no obligation to inform the reader of any changes in laws or other factors that could affect the information contained herein.



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