Refresh to rules is a welcome change
The US Department of Labor (DOL) announced a proposed rule intended to serve as a supplement to the DOL’s existing electronic disclosure regulations.
The proposed rule leaves the existing electronic disclosure regulations in place but adds to them by permitting retirement plans to satisfy certain ERISA disclosure requirements by posting those documents to a website established for this purpose and providing notice to participants that the documents are available online.
Potential benefits of the DOL’s proposal, if implemented, include:
- Plan administrators would save an estimated $2.4 billion over 10 years resulting from eliminating distribution and mailing costs associated with furnishing retirement plan related disclosures (according to the DOL’s proposal)
- The rule would reduce paper waste, providing environmental benefits
- Electronic disclosures may allow opportunity to provide improved accessibility
- Overall engagement with the plan (and therefore deferral rates) would likely increase as participants are required to access disclosures via their retirement plan’s website
What you should know
- The proposed rule leaves the existing 2002 disclosure regulations in place; but is intended to make the electronic disclosure of ERISA documents simpler and more in line with the technologies of today.
- Retirement plan administrators would be able to post disclosure documents to a designated website rather than sending paper mailings.
- Certain procedural and substantive requirements must be met, including: notification by paper mailing that documents will begin to be furnished electronically, electronic notice sent when documents are posted to the designated website (with some exceptions), and the establishment of a system to maintain current email addresses.
- Electronic delivery would be allowed as the default option but would only be permitted for use with participants who have an email address on file with the plan and who have not opted out of electronic delivery. The current rule allows electronic delivery only to those who have regular access to a computer at work as an integral part of their job or who affirmatively consent.
- The proposal was published on October 23; public comment is invited through November 22.