On May 21, 2020, the Department of Labor (DOL) published the final rules for electronic disclosure of required documents pertaining to retirement plans. Here is a list of the top questions and answers on what it may mean for you and your plan.
Who can I send it to?
Under the rule, you can provide documents to a “Covered Individual,” which is a participant, beneficiary or other individual that is entitled to receive the document, that voluntarily provides an email address or smart phone number where the individual can receive a written “Notice of Internet Availability” (NOIA). This would include email or phone numbers provided by the employer for employment related purposes.
What can I send?
You can provide to any “Covered Individual” documents, notices and information that the Plan Administrator is required to furnish normally except for items that must be furnished upon request. A short list of these items includes:
- Safe Harbor Notice
- Summary Annual Report
- 404(a)5 notice (fee disclosure)
When can I start?
Now. Of course, there is a process and we can help you get started. Remember that you are not required to use the electronic notices so do not feel like you are behind or need to rush to get started.
Why would I do this?
By going electronic, you reduce the cost associated with preparing and distributing notices while also having a copy archived while active if you do need to provide a printed copy.
How do I start?
You must provide a paper notice informing participants how and when you are going to start distributing notices. The notice must be personalized to the participant. Once you provide this notice, you can move forward with providing notices electronically.
Here are the requirements for the paper notice:
- A statement that outlines the plan to send notices electronically and where the notice will be sent. List the email address or phone number for the participant to verify.
- Any instructions needed for how to access the provided information. For example, include instructions for how to log onto a website if they will be required to do so. Disclose any special apps or other accounts they may not already have (PDF viewer, company website, etc.).
- A notice of how long a document will be available. Generally, this will be one year or when updated, depending on the notice.
- A statement that the participant has the right to request and receive (at no charge) a paper version of any document posted electronically. Outline this process, even if it is “contact your Plan Administrator”.
- A statement of the right to opt out of all electronic delivery and to receive paper versions of all Covered Documents (at no charge). Outline this process.
There are also requirements for information that must be included on each notice when you distribute them electronically. We can help you prepare for this as well.
Other items to keep in mind:
- Due dates do not change. Most notices state that they must be distributed by a certain date. That generally means delivery in 2-10 business days depending on several factors. You do not get to build in delivery days to your timeline. Notices are due when they are due.
- If there is a delivery failure of the electronic notice, the participant is automatically designated to receive paper for all notices going forward. If they update their information, they can opt out of paper again at that point.
- If you change service providers, you do not restart the program. If someone requested paper only when you were with Provider A, they remain paper only with Provider B.
- If you are posting a document to a website, the link provided must take the participant directly to that page. The notice must be easily attainable by the participant.
For more information
While guidance on this has been available since 2004, the issuance of this final rule in May was necessary to clarify these details. We can work with you to decide if electronic disclosure is a good fit for you and your participants. If it is a good fit, we can help you get the process started.
For additional information and applicability to your situation, we recommend consulting with your AGH professional or Brad Bechtel using the information below.
Information in this document has been obtained by Allen, Gibbs & Houlik, L.C. from sources believed to be reliable. However, AGH does not guarantee the accuracy nor completeness of any information. This communication does not and is not intended to provide legal, accounting or other professional advice or opinions on specific facts or matters, and accordingly, AGH assumes no liability whatsoever in connection with its use. Nothing in this communication can be used to avoid penalties that may be imposed by a governmental taxing authority or agency.
Senior Vice President
Employee Benefit Services
Brad Bechtel leads AGH’s employee benefit services (EBS) division, which serves clients nationwide. EBS is one of the region's largest providers of retirement plan recordkeeping services for daily valuation plans. The division provides consulting services to clients on employee benefit plans, including plan design, implementation, operation, fiduciary due diligence, compliance, and through affiliate AGH Wealth Management, discretionary and non-discretionary investment fiduciary services, investment advisory services and employee education.
Bechtel is experienced in executive compensation, including non-qualified, phantom stock, top hat and excess benefit plans, as well as other deferred compensation approaches. He has consulted for numerous Fortune 500 corporations on investment management and fiduciary due diligence. He also provides search and selection due diligence consulting services for companies seeking new investment and recordkeeping providers for their qualified plans. Bechtel is a registered investment advisor who holds Series 7, 24 and 66 FINRA registrations, and he is a member of the American Society of Pension Professionals & Actuaries.