On May 27, 2020 the DOL published new safe harbor regulations for plan administrators to electronically deliver required disclosures to retirement plan participants and beneficiaries. This new safe harbor was put into place to take advantage of constant technological changes and to ease administrative challenges and costs. These new regulations do not replace the 2002 safe harbor, they simply provide an alternative method for providing notices using electronic media. Plan administrators have flexibility when selecting which option would work best for their participants and beneficiaries.
New versus Old
In 2002, the DOL issued regulations on electronic disclosures. To qualify for the safe harbor, it was required to have consent by the recipient to receive electronic disclosures unless sent to an active employee who is “wired at work”, meaning they have the ability to effectively access documents furnished in electronic form at any location “where the participant is reasonably expected to perform his or her duties as an employee”, but only if an integral part of the participant’s duties is to access the employer’s or plan sponsor’s electronic information system. With the new 2020 safe harbor regulations, by default, the plan administrator may provide covered documents electronically, unless a plan participant opts out of receiving them electronically, or requests paper copies.
What documents are covered under these new regulations?
The new regulations refer to covered documents as documents plan administrators are required to provide to participants and beneficiaries under Title 1 of ERISA, however they do not include documents provided only upon request.
Covered Document Requirements
In order to send a covered document using electronic delivery, the document must meet certain requirements. The document must:
- Be presented on the website in a manner calculated to be understood by the average plan participant.
- Be written in manner understood by the average plan participant.
- Be searchable electronically.
- Be presented in a widely available format or formats suitable to be read online, printed clearly and permanently retained.
- Remain available on the website until it is superseded by a subsequent version of the covered document, if applicable, but in no event less than one year after the date the covered document is made available on the website.
These requirements do not preclude a plan administrator from keeping documents on the website for longer than required and participants can still request copies of documents that are older than 1 year.
In addition, the plan administrator must take reasonable measures to protect the confidentiality of personal information relating to the covered individual.
Who is a Covered Individual?
A covered individual is an individual who is entitled to receive covered documents by the plan administrator. This individual must provide an electronic address, which may include an email address or smartphone number. This requirement may be satisfied if a company provides email addresses due to employment. An employer cannot assign email addresses solely for the purpose of sending electronic disclosures. Another option would be to have employees provide emails addresses or smartphone numbers as part of a job application or plan enrollment process. In the case of a terminated participant with an employer provided electronic address, the plan administrator must take measures to ensure the continued availability of the electronic address being used or obtain a new electronic address.
To use the new safe harbor regulations, plan administrators must first send out a paper notice explaining that covered documents will be provided electronically. The notice must contain the following:
- Statement that covered documents will be provided electronically to an electronic address.
- Electronic address that will be used for the individual.
- Instructions to access the covered documents.
- Statement that covered documents are not required for more than one year, or if later, superseded by a newer version of the document.
- Statement of right to request paper version of covered documents, free of charge, and explanation of process to do so.
- Statement of right to opt out of electronic delivery of covered documents, free of charge, and explanation of process to do so.
Notice of Internet Availability (NOIA)
Once electronic addresses have been obtained and participants and beneficiaries have been provided the initial paper notice, the plan administrator can deliver required documents electronically. They may either send an email or text that provides a link to where the covered documents are located or by attaching the documents to the message. The following are requirements of the NOIA:
- Prominent Statement (subject line). For example: Disclosure About Your Retirement Plan.
- This Statement must be included: Important information about your retirement plan is now available. Please review this information.
- Must include identification of covered document by name and description of covered document if necessary.
- The internet website address or hyperlink where the covered document is available. The covered documents must be easily accessible.
- Statement of right to request a paper version of the covered documents, free of charge, and an explanation of process to do so. Only one copy must be provided free of charge.
- Statement of right to opt out of electronic delivery of covered documents, free of charge, and an explanation of process to do so.
- Statement that covered document is not required to be available on the website for more than 1 year or, if later, superseded by subsequent version of the covered document.
- Telephone number to contact the plan administrator or representative of plan.
- May include pictures/logos, etc., however design must not be misleading.
- Must be written in manner understood by average plan participant.
The system for sending a NOIA must be able to alert the plan administrator of a covered individual’s invalid electronic address. If notified, take necessary steps to attain a new electronic address or provide the covered document to the participant or beneficiary by paper.
Is it possible to send a NOIA for multiple documents?
A combined notice may be sent for the following covered documents: Summary Plan Description, Summary Annual Report, annual (but not quarterly) participant statement, annual investment related disclosures, annual funding notice or certain other documents provided annually. Combined notices cannot be sent for documents that require action of a participant or beneficiary by a deadline, or other documents with a deadline more frequent that annually.
Plan Administrators mush furnish a NOIA at the time the covered document is made available on the website. However, if a Plan Administrator furnishes a NOIA for more than 1 covered document, requirements are satisfied if the combined NOIA is furnished each plan year, or within a 14-month period, to comply with the annual NOIA requirement, if a NOIA was furnished in a prior plan year. Each covered document described in the NOIA must be made available on the website no later than the date it must be furnished as required by law.
The plan administrator also may provide the covered documents in an email, which would follow similar rules. Since the covered document will be furnished directly, the plan administrator does not need to send a NOIA. Rather, the plan administrator must send an email with most of the same requirements they would have with a NOIA.
When are the new 2020 Electronic Disclosure requirements effective?
The 2020 safe harbor rules are effective July 27, 2020.
Please contact your BREA administrator for any questions you may have on the 2020 safe harbor Electronic Disclosure Regulations.