DOL publishes final electronic disclosure rule for retirement benefit plans

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June 2020

Overview

The Department of Labor (DOL) on May 27 published a final rule intended to make it easier for employee benefit plan administrators to use electronic delivery as the default method of delivering disclosures required under the Employee Retirement Income Security Act of 1974 (ERISA). Administrators of ERISA-covered retirement plans must provide plan participants with certain information and documents through methods ‘reasonably calculated to ensure actual receipt of the material.’ Until now, the use of email for disclosures generally has been limited to participants who are ‘wired at work’ or who affirmatively opted-in to receive disclosures electronically. 

The final rule allows retirement plan administrators to use electronic delivery as the default method for disclosure for any participant -- whether an active or former employee -- who has provided an electronic address to the plan administrator or who has received an electronic address from the plan sponsor. The plan administrator must satisfy procedures established by the rule to use electronic disclosure methods.

The new rule is effective beginning July 27, 2020. The DOL has stated, however, that it will not take any enforcement action against a plan administrator that relies on the final rule before that date.

The takeaway

Plan sponsors should review the final rule and safe harbor and determine if and when a transition to electronic delivery would be appropriate for their plan. Prior to transitioning to an electronic delivery process, it will be necessary to prepare and provide the prescribed initial notice to plan participants and to collect participant email addresses, if they have not already been appropriately collected. Plan sponsors should coordinate with in-house or outsourced administrators to validate that websites used to furnish materials under the final rule comply with established criteria and to develop a process to collect email addresses from terminating employees and an action plan to collect email addresses from previously terminated employees.

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Craig O’Donnell

Workforce of the Future, Rewards and Well-Being Leader, PwC US

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