New E-Delivery Ruling Benefits      Your Plan and Participants

On May 21, 2020, the DOL announced the new e-delivery guidelines regarding ERISA-covered retirement plans, intended to benefit both plan sponsors and participants: Electronic Disclosure Safe Harbor for Retirement Plans1.

Like many retirement plan sponsors, you probably have been encouraging your participants to receive documents electronically for some time now. The good news is that e-delivery will now be the default delivery method for retirement plans. As described in the new rule, plan sponsors who comply with the new safe harbor will satisfy their statutory duty under ERISA to furnish “covered documents” to “covered individuals” by delivering them electronically. 

The new rule may be welcome now as many plan sponsors focus on cost saving during the pandemic crisis. And plans may reap major long-term benefits: The DOL estimates it will save over $3 billion in net costs for ERISA-covered plans over the next ten years.

The new rule is good for your employees, as well:

  • SPARK Institute’s researchfound that e-delivery would produce between $250 and $450 million in annual aggregate savings that would accrue directly to plan participants and improve their retirement security by up to 9% in the accumulation phase.
  • Important information about their plans will be more accessible and delivered to them in more timely ways, so you can be more confident that participants are receiving the information they need.
  • It will encourage them to engage more with the online tools your plan provides.
  • Electronic delivery is a “greener” choice for the environment.

How Will It Work?

The DOL ruling states that you must provide participants with a notification, on paper, that the way they currently receive retirement plan disclosures is changing. The notice must inform them of the new electronic delivery method, the electronic address you will use, and the right to opt out if they prefer paper disclosures, among other things. The notice must be given to participants before your plan may use the new safe harbor.

You can choose one of these two methods for default e-delivery:

  • Website Posting – You may post plan-related documents, disclosures or other communications on a website. You will have to notify your plan’s participants via email that you have posted the information and how they can access it.
  • Email Delivery Or you may send plan-related documents directly to participants via email, with the documents either in the email body or included as attachments.

Keep in mind that this safe harbor also involves a number of protections for plan participants that you will have to follow, as outlined here3 – including providing the opportunity to opt out of e-delivery at any time.

Getting Started

Technically, the new safe harbor is effective 60 days after its publication in the Federal Register on May 27, 2020 – that is, July 27, 2020. However, the DOL has stated that it will not take any enforcement action against plan administrators that rely on this safe harbor before that date.

For more information on e-delivery, you can contact your Financial Advisor.  You should discuss any potential changes to your retirement plan with your legal and tax advisors to determine what steps you must take before making any changes.

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1 US Department of Labor https://www.dol.gov/newsroom/releases/ebsa/ebsa20200521

SPARK Applauds Labor department E-Delivery, Final Rule Rouse: “Default electronic delivery works” https://www.sparkinstitute.org/news/spark-applauds-labor-department-e-delivery-final-rule-rouse-default-electronic-delivery-works/ 

3 Employee Benefits Security Administration:  Electronic Disclosure Safe Harbor for Retirement Plans https://www.dol.gov/agencies/ebsa/about-ebsa/our-activities/resource-center/fact-sheets/electronic-disclosure-safe-harbor-for-retirement-plans

 

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