U.S. Department of Labor Proposes New Electronic Disclosure Rules
Published December 6, 2019
Retirement plan sponsors have a fiduciary responsibility to distribute certain information to plan participants from time to time such as summary annual reports and annual fee disclosure notices. The purpose of these disclosures is to equip plan participants with the information necessary to make timely and informed decisions about their retirement account. Current government regulations direct that retirement plan notices to plan participants be printed unless restrictive e-mail authorization requirements are met. Consistent with President Donald J. Trump’s Executive Order 13847, Strengthening Retirement Security in America, the U.S. Department of Labor (“Department”) announced a proposed rule to allow online retirement plan disclosures to reduce printing and mail expenses for job creators and make disclosures more readily accessible and useful for America’s workers. The order explicitly directed the Department to explore the broader use of electronic delivery as a way to improve the effectiveness of disclosures.
Under current rules, if retirement plan participants don’t routinely work online, plan sponsors must solicit their consent to receive plan information electronically. Participants must indicate consent by a means that shows they can receive electronic disclosures, such as by sending a verifiable e-mail to the plan sponsor. The proposal offers a safe harbor for employers who want to make retirement plan disclosures accessible on a website. Plan participants would be notified that information is available online, including instructions for how to access the disclosures and their right to receive paper copies of the disclosures. The proposal includes additional protections for retirement savers, such as standards for the website where disclosures will be posted and system checks for invalid electronic addresses.
The Department expects that the proposal to expand use of internet technology to furnish covered disclosures to workers will result in approximately $2.4 billion net cost savings over the next 10 years for ERISA-covered retirement plans by eliminating materials, printing, and mailing costs associated with furnishing printed disclosures.
If you have any questions or would like additional information regarding the proposal on new electronic disclosure rules please contact MCM Senior Manager Shannon Crane via email (email@example.com) or phone (812.670.3471).