Modernizing ERISA Disclosure Requirements: New DOL Requirements

Saturday, November 14, 2020

New Division of Labor Regulation Presents Further Digital Supply Strategies for Retirement Plans

A plan administrator is required to furnish ERISA-required notices and disclosures utilizing a supply technique that’s fairly calculated to make sure precise receipt by individuals, beneficiaries, and different people. Below rules issued in 2002, the Division of Labor (“DOL”) established a protected harbor for satisfying this requirement by using digital media (e.g., e-mail).

On Might 27, 2020, the DOL printed closing rules relating to a brand new, voluntary protected harbor for plan directors of retirement plans to furnish notices and disclosures required beneath ERISA utilizing digital media because the default technique of supply. These closing rules turned efficient on July 27, 2020. The brand new protected harbor is along with the prevailing protected harbor for digital supply. Nonetheless, not like the prevailing protected harbor, the brand new protected harbor doesn’t apply to well being and welfare plans.

This shopper advisory summarizes each the prevailing and new protected harbors:

Current Digital Supply Secure Harbor (Retirement and Welfare Plan Disclosures)

The 2002 protected harbor might be utilized for offering paperwork to solely two forms of people: (1) workers with the flexibility to successfully entry digital notices and disclosures at any location the place they’re fairly anticipated to carry out their employment duties and for whom entry to the employer’s digital data system is an integral a part of these duties (so-called “wired at work” workers) and (2) people entitled to the relevant notices and disclosures beneath ERISA who affirmatively consent to receiving notices and disclosures electronically.

To fulfill the 2002 protected harbor for digital supply to such people, plan directors are required to have acceptable and needed measures in place that are fairly calculated to make sure that the system for furnishing notices and disclosures leads to precise receipt. Moreover, sure discover necessities are required on the time an digital discover or disclosure is furnished, and a person is required to be given the correct to request and obtain a paper copy of the digital discover or disclosure freed from cost.

New Digital Supply Secure Harbor (Retirement Plan Disclosures Solely)

Out there Strategies of Supply

Below the brand new protected harbor, a plan administrator of a retirement plan might use one in every of two optionally available strategies for furnishing sure retirement plan notices and disclosures electronically to lined people. A “lined particular person” is outlined extra broadly beneath the brand new protected harbor than beneath the 2002 protected harbor and contains any particular person entitled to the relevant discover or disclosure beneath ERISA who has a legitimate digital deal with, as described under.

The supply strategies obtainable beneath the brand new protected harbor are:

Web site Posting (“Discover and Entry”) – The plan administrator might submit the notices and disclosures on a web site, supplied that acceptable discover (known as “Discover of Web Availability” or “NOIA”) is furnished to the digital addresses of the lined people. Notices and disclosures should stay on the designated web site for the longer of 1 12 months or till the notices and disclosures are up to date. Technical necessities should be happy each with respect to the web site and to the format of the discover or disclosure.

E-mail Supply – The plan administrator might ship the notices and disclosures on to the digital addresses of lined people. The e-mail should embrace “Disclosure About Your Retirement Plan” within the topic line, and the related discover or disclosure might both be connected to the e-mail or included within the physique of the e-mail. Technical necessities should be happy with respect to the format of the discover or disclosure.

In both case, a lined particular person should be given the correct to decide out of digital supply and to obtain a paper copy of any digital discover or disclosure freed from cost.

Legitimate Digital Tackle

The requirement mentioned above for a legitimate digital deal with is happy if (1) the employer gives an digital deal with to workers for an employment-related function (apart from the supply of notices and disclosures required by ERISA) or (2) an worker or beneficiary gives a private digital deal with to the employer or plan administrator, for instance as a part of the job software course of or on different HR paperwork or plan enrollment paperwork.

For transition functions, a plan administrator might depend on digital addresses obtained previous to the efficient date of the brand new protected harbor for which the supply of the digital addresses could also be unknown, supplied that the plan administrator acts fairly, in good religion, and in any other case complies with the necessities of the brand new protected harbor.

Discover Necessities for New Secure Harbors

Previous to counting on both of the above new protected harbor supply strategies, a plan administrator should furnish every lined particular person a paper notification that features the next:

A press release that lined notices and disclosures will likely be furnished electronically. The digital deal with that will likely be used for that particular person.
Any directions essential to entry the lined notices and disclosures.
The next three statements:

If the discover and entry technique will likely be used, a press release relating to the interval that the lined discover or disclosure will likely be obtainable on the web site;
The way to request a free paper model of a lined discover or disclosure; and
The way to decide out of digital supply and obtain solely paper variations of lined notices and disclosures.

Moreover, beneath the discover and entry supply technique, a NOIA should typically be furnished to the digital addresses of the lined people on the time a discover or disclosure is made obtainable on the web site which incorporates the next:

A distinguished assertion of “Disclosure About Your Retirement Plan.”
A press release that reads: ‘‘Vital details about your retirement plan is now obtainable. Please overview this data.’’
The title of the discover or disclosure and, if the title alone wouldn’t fairly convey the character of the discover or disclosure, a short description of the discover or disclosure.
The web web site deal with (or a hyperlink) the place the discover or disclosure is on the market. A press release of the correct to request and procure a paper copy of the lined discover or disclosure freed from cost and an evidence of learn how to train this proper.
The three statements required to be included within the preliminary discover, described above.

The brand new protected harbor additionally permits a plan administrator to mix the NOIA for a number of notices and disclosures supplied sure necessities are met.

System Checks for Digital Addresses

Along with the above discover necessities, a plan administrator should make sure that its digital supply system is designed to alert it if a participant’s digital deal with is invalid or inoperable and take steps to repair any such addresses or present paper copies.

For employer-assigned digital addresses, the plan administrator is required to have measures in place which are fairly calculated to make sure the continued accuracy and availability of such deal with following the person’s severance from employment, or have measures in place to acquire a brand new digital deal with from terminated workers.