DOL finalizes electronic delivery rule for retirement plans
The Department Of Labor (DOL) estimates that over the next decade this rule will save approximately $3.2 billion in net costs for retirement plans covered by the Employee Retirement Income Security Act of 1974 (ERISA)-plans that rely on the rule will be able to eliminate significant materials, printing and mailing costs associated with furnishing printed disclosures.
The final Department of Labor e-delivery regulations set aim to make it easier for retirement plan administrators to deliver notices to members and beneficiaries via internet websites, email or mobile apps. These new rules began to take effect on July 27th, 2020, although the DOL confirmed that it will not enforce any action against plan administrators relying on the new rules before that date. These new rules apply only to retirement plans, but the DOL may be addressing E-delivery rules for health and welfare plans in the future.
This final rule allows delivery of documents by email as an alternative method of e-delivery. Administrators can now choose to post documents to their websites or mobile platforms to house notices. These posted notices have to be available for at least a year, even if superseded earlier. Participants are able to opt-out of e-delivery entirely, but this ruling does not allow participants to opt out on a document to document basis, as the previous proposal did.
The new safe harbor applies to beneficiaries, participants and and other individuals entitled to covered documents under ERISA if they provide the employer or plan administrator with an electronic address. This could be an email address or even smartphone number capable of receiving written notices. The safe harbor is intended to encompass future technological advances that are of a similar capacity for the future. However, if an employer uses a phone number, they must confirm that the number can receive written messages. Similarly, spouses or other beneficiaries must provide the employer or administrator with an electronic address. Plan administrators are able to use previously provided emails from their beneficiaries, participants and employers but must comply with all safeguards.
The final ruling does not provide a model NOIA. The commentators who worked on the proposed rule said the safe harbor requirements in place were quite specific, and that the current model best suited the needs of each employer's circumstances.
Can you still use paper copies?
Plan administators must hae reasonable procedures for beneficiaries and participants to obtain paper copies of overed disclosures to particpants who want to opt-out of the e-delivery options.All administrators are required to provide one paper copy of a disclosure, free of charge unless plan terms or other ERISA rules require otherwise. There is not allowed to be a fee administered to opt out.
Requirements for a NOIA
There are quite a few requirements for a NOIA to be understandable before it can be sent to the individual's preferred method of e-delivery:
- The document must be written so that it can be understood by the average plan participant.
- The document must include the following statements: "Disclosure About Your Retirement Plan" and "Important information about your retirement plan is now available. Please review information."
- Reference the address or include a hyperlink to where the document is available.
- Identify the document by name and briefly describe the document, if it's not obvious from the name.
- Include a statement on how to request a paper version of the document, free of charge, and how to obtain it.
- Include a statement about the right, free of charge, to opt-out of this e-delivery method and information about how to do so.
- Include a statement that the document is required by law to be left up for one year, or longer.
- Include the plan administrator's phone number.
Read the full DOL document here!
PEPS? MEPS? GoPS? what are these?
PEPs
- Introduced with the SECURE act, PEPS allow unrelated employers that meet certain requirements to band together to participate in a single retirement plan, in order to take advantage of their collective bargaining power to obtain lower fees and better services. PEPs are limited to 401k plans, Defined benefit plans, governmental 457(b) plans, 403(b) plans and multi-employer plans are excluded from new PEP provisions.
MEPS
- MEPs allow related businesses (ie: construction companies) to band together in a similar manner to PEPs to participate in a single retirement plan. While MEPs previously existed, they are now much easier and more beneficial to establish. Previously one non compliant employer could disqualify the entire plan, but provisions have been enacted to ensure this does not happen. SECURE act also exempts smaller MEPs from expensive audits, as long as no single employer exceeds 100 employees total.
GoPs
- A GoP is another new type of plan created by the SECURE act, in which employers can file a single form 5500 for multiple defined contribution plans. The plans must have the same trustee, administrator, fiduciaries, investments and plan year in order to be considered. Unlike MEPs and PEPs, GoPs are not single plans, but rather a single form 5500 filing.
