The DOL Proposes New Electronic 401(k) Disclosure Rules
Electronic delivery can be a win-win
- Allows participants to quickly respond to plan information received electronically;
- Ensures information remains up-to-date and accessible for participants in “real-time;”
- Provides information that is more accessible – and digestible;
- Provides information that can be more readily customized; and
- Provides a better guarantee of actual receipt of information.
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Current electronic delivery rules
- The employee must be able to access their work e-mail at a location where he or she is reasonably expected to perform his or her duties as an employee.
- Access to the e-mail account is an integral part of the employee’s job responsibilities.
What is the proposed “notice and access” rule?
- Covered individuals – Website disclosure can only be made to 401(k) participants or beneficiaries that have provided an e-mail address or smartphone number. For active employees, an employer-provided e-mail address or smartphone number automatically satisfies this requirement. Access to an employer-provided computer is not required.
- Covered documents – All ERISA-mandated notices qualify, other than documents that must be furnished upon request. Covered documents must be posted to the website no later than their ERISA deadline.
- Notice of Internet Availability - Covered individuals must receive an electronic Notice of Internet Availability each time a covered document is posted to the website. Certain covered documents may be covered by a combined notice. A combined notice must be provided at least once every 14 months. Notices must remind the participant of their right to a paper notice, of the right to opt-out of electronic delivery altogether, and the procedures to exercise such rights.
- Initial paper notice – Before reliance is possible, employers must provide each covered individual with a paper notice about the electronic delivery of future notices and the right to receive paper notices instead.
- Website standards – Employers must take measures reasonably calculated to ensure that covered documents are 1) posted to the website no later than their ERISA-mandated deadline, 2) available until they are superseded, 3) presented in an understandable format, 4) suitable for both online viewing and printing, and 5) searchable.
- Inoperable electronic addresses – The system for furnishing the notice of internet availability must be designed to alert the employer of an invalid or inoperable electronic address. If an employer becomes aware of an invalid or inoperable electronic address, they must treat the covered individual as if they had opted out of electronic delivery if the issue can’t be promptly cured.
Electronic delivery is long overdue
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About Eric Droblyen
Eric Droblyen began his career as an ERISA compliance specialist with Charles Schwab in the mid-1990s. His keen grasp on 401k plan administration and compliance matters has made Eric a sought after speaker. He has delivered presentations at a number of events, including the American Society of Pension Professionals and Actuaries (ASPPA) Annual Conference. As President and CEO of Employee Fiduciary, Eric is responsible for all aspects of the company’s operations and service delivery.