Q: Are these new rules required to be followed?
A: No, rules for electronic delivery issued by the Department of Labor (DOL) in 2002 can still be used. However, the new 2020 rules are more manageable and will generally render the older rules obsolete.
Q: Which employee benefit plans do these new rules apply to?
A: Only retirement plans such as 401(k), 403(b), profit sharing, money purchase, defined benefit and cash balance plans. These new rules are not applicable to health and welfare plans.
Q: Which notices and disclosures can be sent under these new DOL rules?
A: The new rules apply to notices and disclosures that are within the jurisdiction of the DOL and are collectively referred to as “covered documents”. They include summary annual reports, summary plan descriptions, summary of material modifications, periodic benefit statements, fee disclosures, automatic enrollment notices, qualified default investment arrangement (QDIA) notices, blackout notices, annual funding notices and claim denials. However, any covered document that the participant has the right to request on paper must be provided in paper format upon such request.
Q: Which notices and disclosures cannot be sent under these new DOL rules?
A: The new rules do not apply to required notices and disclosures that are exclusively within the jurisdiction of the IRS such as safe harbor notices, distribution notices, universal availability notices, and beneficiary designations. The retirement plan industry is hopeful that the IRS will soon allow the new DOL rules to be used for its notices and disclosures as well.
Q: Who do the new rules apply to?
A: Participants, beneficiaries and any other individuals entitled to receive notices and disclosures , if they provide the employer or plan administrator with an email address, or smartphone number capable of receiving text messages, collectively referred to as an “electronic address”.
Q: Which electronic address can be used to deliver these covered documents?
A: An employer-provided email address (but only if the employee also uses it for work purposes, not just to receive plan-related items); an employee’s personal electronic address provided as part of the job application process, or from other human resources documents; or an electronic address requested during the plan’s enrollment process. Beneficiaries may also affirmatively provide an electronic address and plan administrators may rely on electronic addresses already on file at the time the new rules become effective.
Q: What obligation does an employer have to maintain electronic addresses for terminated employees?
A: Because many of the notices and disclosures eligible for electronic delivery are required to be provided to terminated employees who still have a vested benefit in the plan, the best practice would be to maintain up-to-date personal email addresses and smartphone numbers for this purpose.
Q: Can the covered documents be emailed directly to eligible individuals?
A: Yes, as long as certain steps are taken. The subject line of the email must read “Disclosure About Your Retirement Plan”. The text of the email must identify the attachment by name and provide a brief description if the name would not reasonably explain the information in the covered document, as well as a statement of the participant’s right to request paper copies at no charge or even entirely opt out of electronic delivery, and the procedure for making this request.
Q: Are there any special requirements regarding the timing and format of the covered documents?
A: The plan administrator must take reasonable measures to ensure the covered document is available no later than the document’s required due date to be furnished; the covered document is presented in a manner calculated to be understood by the average individual; the format is suitable to be read both online and printed clearly on paper; the covered document can be searched electronically by numbers, letters or words; and it is available in a format that allows it to be permanently saved in an electronic copy. The plan administrator must also take reasonable measures to ensure that the email and attachment protects the confidentiality of the eligible individual’s personal information.
Q: Can the covered documents be posted on a website or available in a mobile app instead of emailed directly to eligible individuals?
A: Yes, but eligible individuals must first receive a paper notification which includes the electronic address that will be used for the individual, explains that some or all covered documents will be furnished electronically, and that they have a right to opt out of electronic delivery and receive future covered documents on paper, at no charge. Thereafter, eligible individuals must receive a Notice of Internet Availability (NOIA) electronically when a covered document, or group of covered documents, are being sent to an electronic address.
Q: What information is required to be included in the NOIA?
A: The NOIA must include the following information:
- A prominent statement, such as a subject line or heading, that reads “Disclosure About Your Retirement Plan”;
- A statement that reads “Important information about your retirement plan is now available. Please review this information.”;
- An easily understandable description of the covered document being provided;
- The website address or hyperlink directly to the location of the covered document, if it is not being provided as an attachment;
- Any special instructions necessary to access the covered document;
- A statement of the right to request the covered document on paper, at no charge, and the procedure for requesting a paper copy;
- A statement of the continuing right to opt out of electronic delivery and the procedure for opting out;
- A cautionary statement that the covered document is not required to be available on the website or mobile app for more than one year, or if later, after it is replaced by an updated version; and
- A telephone number to contact the plan administrator or any other designated representative.
Q: Is there a requirement to continue sending NOIAs?
A: Yes, but NOIAs are sent electronically any time a new covered document, or group of covered documents, is made available.
Q: Are there any requirements to track receipt of the electronic NOIAs?
A: Yes, the system providing the NOIAs electronically must be designed to advise the plan administrator of invalid or inoperable electronic addresses. The plan administrator must take prompt steps to either obtain an updated electronic address or treat the individual as having opted out of electronic delivery.
Q: Can one NOIA be sent each year with all of that year’s covered documents?
A: Not necessarily. Covered documents required to be furnished annually can be combined in one notification. However, covered documents that are required to be furnished more frequently, or upon the occurrence of a particular event, must be sent separately and cannot be combined with annual covered documents.
Q: What are the standards for the website or mobile app used to post covered documents?
A: The plan administrator must take reasonable measures to ensure the covered documents are available no later than the particular item’s due date to be furnished; the covered documents remain on the website for at least one year after they are made available, or if later, the date they are replaced by an updated version; the covered documents are presented in a manner calculated to be understood by the average individual; the format is suitable to be read both online and printed clearly on paper; the covered documents can be searched electronically by numbers, letters or words; and it is available in a format that allows it to be permanently saved in an electronic copy.
Q: Do I need to post the covered documents on my company website or can they be posted on the website of the plan’s record keeper or financial institution?
A: The new rules do not restrict which websites can be used for making covered documents available to participants, as long as the plan administrator has ensured the existence of the website and takes reasonable measures to ensure that the website protects the confidentiality of the eligible individual’s personal information. You should check with your plan’s record keeper or financial institution for updates on the options for posting of these covered documents to their participant website.
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Retirement plans are a key benefit to your organization, but managing them can be complex and time-consuming. At CBIZ Retirement Plan Services, we’re passionate about helping people achieve their retirement savings goals while also helping their employers navigate the fiduciary responsibilities that come with sponsoring a retirement plan. Depending on the area, our team of professionals can help guide you to make the decisions that best support your organization.
Learn more at www.cbiz.com/retirement
CBIZ Retirement Plan Services is a trade name under which certain subsidiaries of CBIZ, Inc. (NYSE Listed: CBZ) market investment advisory, investment management, third party administration, actuarial and other retirement plan services. Investment advisory and investment management services offered through CBIZ Investment Advisory Services, LLC, Registered Investment Adviser. Investments, investment advisory and investment management services may also be offered through CBIZ Financial Solutions, Inc., Member FINRA, SIPC and Registered Investment Adviser, dba CBIZ Retirement Plan Advisory Services. Third party administration, actuarial and other consulting services offered through CBIZ Benefits & Insurance Services, Inc.