DOL finalizes rule for alternative safe harbor methods for disclosure through electronic media


Friday, June 26, 2020 | By Chris Robino, Senior ERISA Counsel

DOL finalizes rule for alternative safe harbor methods for disclosure through electronic media

The Department of Labor (DOL) has issued final regulations providing two new safe harbors for retirement plans to furnish required disclosures by email or other electronic means to participants and beneficiaries. The first new safe harbor follows a Notice and Access framework, whereas the second alternative safe harbor utilizes a direct e-mail model for delivery of ERISA required documents.

These new safe harbors are additional methods of delivery and do not substantively change the 2002 safe harbor.  Plan administrators, therefore, have additional flexibility with the rule in selecting the electronic delivery method that works best for the plan and its participants and beneficiaries. Plan administrators may continue to rely on the 2002 safe harbor for electronic delivery or to furnish paper documents by hand-delivery or by mail. 

The 2002 safe harbor applies to only two categories of participants and beneficiaries:

  • Employees who are “wired at work”—those with the ability to effectively access electronic disclosures at any location where they are reasonably expected to perform their employment duties and for whom access to the employer’s electronic information system is an integral part of those duties;
  • Individuals entitled to documents under Title I of ERISA who do not fit into the first category, but who affirmatively consent to receive documents electronically.

The DOL’s final e-delivery rule amends ERISA regulations by adding a new section that provides, optional methods to comply with ERISA’s general standard for furnishing or delivering disclosures to participants and beneficiaries (Covered Individuals). 

Purpose of the new safe harbor

The DOL’s principal objective in finalizing this rule is to carefully update ERISA’s electronic delivery rules for required disclosures to better leverage ongoing improvements in online and mobile-based technology and communications and to provide a structure that will be appealing to, and workable for, today’s workers. The Department believes the framework of the final rule strikes an appropriate balance between competing policy goals—on the one hand taking advantage of the innovations and reduced costs that may be achieved through enhanced use of electronic communication, and on the other hand, ensuring suitable safeguards for participants and beneficiaries who may be less ready to move to electronic communication (or who simply prefer paper).

Notice and Access safe harbor

Under this safe harbor, which was included in the proposed regulation, a plan administrator can furnish an ERISA required document by making the document accessible online and furnishing to participants and beneficiaries a notice of internet availability (“NOIA”). Prior to reliance on this safe harbor, the plan administrator must furnish to each individual (i.e., employees and beneficiaries who have either been assigned an employment-related email address or who have voluntarily provided an alternative email address) a notification on paper, written in a manner calculated to be understood by the average plan participant, that covered documents will be furnished electronically. This initial paper notice must, among other things, notify the individual of the documents that will be provided electronically, the address that will be used to deliver the NOIA, and inform the individual of their right to opt out of electronic delivery and instructions on how to exercise that right.

NOIA requirement

NOIA must be sent each time a covered document is posted to a website for review (unless use of a consolidated NOIA is available for annual notices). The regulations also dictate the content that must be included in the NOIA (which you may review by clicking the detailed regulation summary provided below). The final rule also allows the use of a single, consolidated NOIA for certain required documents such as:

  • a summary of plan description
  • any covered document or information that must be furnished annually, rather than upon the occurrence of a particular event, and that does not require action by a covered individual by a particular deadline, examples of the types of such documents include:
    • Summary Annual Reports,
    • annual funding notices, a QDIA notice,
    • an annual [but not quarterly] benefit statement,
    • annual 404(a)(5) participant fee disclosure notice, and
    • any covered document so authorized in writing by the secretaries of Labor and/or Treasury.

Right to copies of paper documents or to opt out of electronic delivery

Upon request, the plan administrator must promptly furnish, free of charge, a paper copy of a covered document. Only one paper copy of any covered document must be provided free of charge. Covered individuals must have the right, free of charge, to globally opt out of electronic delivery and receive only paper versions of covered documents. 

Email monitoring requirements

The system for furnishing an NOIA must be designed to alert the administrator of a covered individual’s invalid or inoperable electronic address. If the administrator is alerted that an electronic address has become invalid or inoperable (i.e., undeliverable), the administrator must promptly take reasonable steps to cure the problem.  These steps may include furnishing the notice of internet availability to a valid and operable secondary or alternative electronic address that had been previously provided by the covered individual.  The administrator may also obtain a new valid and operable electronic address for the covered individual) or treat the covered individual as if he or she had made an election to opt out.  If the administrator treats the covered individual as having opted out of electronic delivery, then they must furnish as soon as is reasonably practicable, a paper version of the covered document originally identified in the undelivered notice of internet availability.

When a covered individual who has been assigned an email address by the employer has their employment terminated, the administrator must take reasonably calculated measures to ensure the continued accuracy and availability of such electronic address. Or obtain a new electronic address that enables receipt of covered documents following the individual’s severance from employment. This is not necessary when the participant has provided an email address for electronic delivery.

Direct email safe harbor

The final rule provides an alternative safe harbor that incorporates much of the safeguards included in the Notice and Access safe harbor; however, rather than publishing documents to a website and sending electronic NOIA to covered individuals, this safe harbor allows direct delivery of the covered document to the participant at an electronic address that is either provided by the individual or assigned by the employer. The rule requires the plan administrator to send the required document to a covered individual’s email address no later than the date on which the covered document must be furnished under ERISA. Additionally, the document must be included in an email that has a content requirement similar to the NOIA. 

Who does it cover?

A “covered individual” is a participant, beneficiary, or other individual entitled to ERISA required notices or documents and who falls into one of the two following categories.

  • An employee who has been assigned an email address by the employer; or
    • Email addresses assigned by the employer must be for legitimate employment-related purposes that include, but may not be limited to, delivery of covered documents. 
  • Participants, beneficiaries or other individuals who have provided the plan administrator with an electronic address at which the covered individual may receive a written NOIA.
    • The electronic address may be an electronic mail (“email”) address or internet-connected mobile-computing-device (e.g., “smartphone”) number.

What materials are covered?

Any document or information that the administrator is required to furnish to participants and beneficiaries pursuant to Title I of ERISA, except for any document or information that must be furnished only upon request.

When is it effective?

The final regulation becomes effective and applicable 60 days after publication in the Federal Register (Final rule was published on May 27th). However, the Department indicated that plans may rely on this regulation immediately, and they have provided an 18-month transition period. This regulation supersedes prior guidance regarding electronic delivery of specific documents (e.g., Field Assistance Bulletin (FAB) 2006-03 (pension benefit statements), FAB 2008-03 (QDIA notices), and Technical Release (TR) 2011-03R (participant fee and investment disclosures). However, during the transition period, plans may continue to rely on this prior guidance for the electronic delivery of the covered documents that were the subject of that guidance. After the transition period, a plan must either rely on the 2002 electronic delivery rule or these two new safe harbors. 

Download our full summary of the rule to learn more.

What now?

It’s estimated the new rule will reduce printing, mailing and related plan costs by $3.2 billion over the next decade. Are you ready to take advantage of these cost savings while also providing more effective communications? Some of the ways SS&C Retirement Solutions can support your digital delivery needs:

  • Notice creation of 404(a)(5), QDIA, Safe Harbor, QACA/EACA/ACA and Fund Change as well as a distribution methodology to upload notices created by a third party.
  • Notices posted on a plan specific microsite, and e-mail notifications are sent to the individuals at the appropriate timing for automated distribution (immediately for a newly hire automatically enrolled for example, annual distribution for everyone else).

Need other materials delivered electronically? We can help there too. Our microsites are customizable, allowing you to easily add enrollment collateral, education, forms, fund fact sheets, performance and other plan related information. If you’d like to hear more about how SS&C Retirement Solutions helps clients meet their e-delivery needs, contact us.



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