DOL Establishes New Electronic Disclosure Safe Harbor for ERISA-Covered Retirement Plans
Kelley Drye Client Advisory
June 3, 2020
On May 27, 2020, the Department of Labor published final regulations establishing a new electronic disclosure safe harbor for ERISA-covered retirement plan (but not health and welfare plan) documents. This new safe harbor does not replace the DOL electronic disclosure safe harbor issued in 2002 (the “2002 safe harbor”), but instead offers employers additional methods for electronic disclosure of plan documentation. Compared to the 2002 safe harbor, the new safe harbor is broader in scope with respect to how electronic disclosures may be made and to whom, but is subject to several administrative requirements and limitations.

We have summarized the new safe harbor rules below to help employers decide which electronic disclosure safe harbor may work best for them.
 

Covered Individuals and Documents

The new safe harbor is available with respect to the two following categories of individuals:   
 
  • plan participants, beneficiaries, or other individuals who provide the employer, plan sponsor or plan administrator with an electronic address (e.g., email address or smartphone number); and    
 
  • anyone who is provided an electronic address by the employer for employment-related purposes that include, but cannot be limited to, delivery of covered documents (collectively, “covered individuals”). 

The forgoing is broader than the 2002 safe harbor, which is limited to individuals who have access to the plan sponsor’s electronic information system as an integral part of their employment duties or who otherwise affirmatively consent to electronic disclosure.

The new safe harbor may be used with respect to any document or information that a retirement plan 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. This is narrower than the 2002 safe harbor, which applies to both retirement and health and welfare plan documentation. Covered individuals must be given the right to request paper versions of covered documents, as well as the right to opt out of electronic delivery altogether.
 

Notice of Internet Availability

To electronically disclose covered documents under the new safe harbor, a plan administrator may use one of the two following disclosure methods:  
 
  • make the covered document available on a website that satisfies certain accessibility requirements and electronically furnish covered individuals with a notice of internet availability (“NOIA”) that satisfies certain content requirements, or
 
  • send the covered document directly to the covered individual’s email address (but not his or her smartphone or other electronic address), either in the body of the email or as an attachment to an email that satisfies certain content requirements. 

The requirements for each method are discussed below.

The NOIA must include:
 
  1. A prominent statement, such as a title, legend or subject line, that reads: “Disclosure About Your Retirement Plan.”

  2. A statement that reads “Important information about your retirement plan is now available.  Please review this information.”

  3. An identification of the covered document by name (for example, a statement that reads: “your Quarterly Benefit Statement is now available”) and a brief description of the covered document if identification only by name would not reasonably convey the nature of the covered document.

  4. The internet website address, or a hyperlink to such address, where the covered document is available.  The website address or hyperlink must be sufficiently specific to provide ready access to the covered document, and will satisfy this standard if it leads the covered individual either directly to the covered document or to a login page that provides, or immediately after a covered individual logs on provides, a prominent link to the covered document.

  5. A statement of the right to request and obtain a paper version of the covered document, free of charge, and an explanation of how to exercise this right.

  6. A statement of the right, free of charge, to opt out of electronic delivery and receive only paper versions of covered documents, and an explanation of how to exercise this right.

  7. A cautionary statement that the covered document is not required to be available on the website for more than one year or, if applicable based on the type of document (e.g., an SPD), the later date on which it is superseded by a subsequent version of the covered document.

  8. A telephone number to contact the administrator or other designated plan representative.

The NOIA must only contain the information set forth above, although it can include pictures, logos, or similar design elements, as long as the design is not inaccurate or misleading and the required content is clear.  The notice must be written in a manner calculated to be understood by the average plan participant.

The NOIA is also permitted to contain a statement as to whether action by the covered individual is invited or required in response to the covered document and how to take such action, or that no action is required, provided that such statement is not inaccurate or misleading.

The NOIA is generally required to be furnished at the time the covered document is made available on the website.  However, plan administrators are permitted to furnish a combined NOIA for certain categories of plan documentation, including summary plan descriptions and any covered document or information that must be furnished annually, rather than upon the occurrence of a particular event, and does not require action by a covered individual by a particular deadline.  A combined NOIA must be provided annually, no more than 14 months following the date of the prior year’s combined NOIA, if any.

The system for furnishing a NOIA must be designed to alert the plan administrator of a covered individual’s invalid or inoperable electronic address.  Plan administrators who receive notice of an invalid or inoperable electronic address must take reasonable steps to cure the problem or treat the affected individual as having elected to opt out of electronic delivery.
 

Website Requirements

In addition to providing a NOIA, the plan administrator must ensure the existence of an internet website at which a covered individual is able to access covered documents.  The plan administrator must take measures reasonably calculated to ensure that the covered document is:
 
  • available on the website no later than the date is it required to be furnished under ERISA;
 
  • available on the website at least until the date that is one year after the date the covered document is made available on the website or, if applicable based on the type document (e.g., an SPD), the later date on which it is superseded by a new version;
 
  • presented on the website in a manner calculated to be understood by the average plan participant;
 
  • presented on the website in a widely-available format or formats that are suitable to be both read online and printed clearly on paper and that allow it to be permanently retained in such electronic format; and
 
  • electronically searchable by numbers, letters or words.

For purposes of the regulation, “website” means an internet website or other internet or electronic-based information repository, such as a mobile application, to which covered individuals have been provided reasonable access.
 

Alternative Email Disclosure

In lieu of providing a NOIA and maintaining the covered documents on a website, the new safe harbor permits plan administrators to furnish covered documents directly to a covered individual’s email address (but not a smartphone or any other type of electronic address).  The email used for this purpose must include the following:
 
  • The covered document, either in the body of the email or as an attachment.
 
  • A subject line that reads: “Disclosure About Your Retirement Plan.”
 
  • If the covered document is an attachment, an identification of the covered document by name and a brief description of the covered document if identification only by name would not reasonably convey the nature of the covered document.
 
  • A statement of the right to request and obtain a paper version of the covered document, free of charge, and an explanation of how to exercise this right.
 
  • A statement of the right, free of charge, to opt out of electronic delivery and receive only paper versions of covered documents, and an explanation of how to exercise this right.
 
  • A telephone number to contact the administrator or other designated plan representative.

The email and the covered document must be written in a manner calculated to be understood by the average plan participant.  The covered document must also be presented in a widely available format or formats that are suitable to be read online, printed clearly on paper, and permanently retained in an electronic format, and the document must be searchable electronically by numbers, letters, or words.  In addition, the plan administrator must take measures reasonably calculated to protect the confidentiality of personal information related to the covered individual.
 

Initial Paper Notice

Before relying on the new safe harbor with respect to any individual, the plan administrator must provide paper notification to the individual that some or all covered documents will be furnished electronically to an electronic address.  This paper notification must identify the electronic address that will be used for the individual, any instructions necessary to access the covered documents, a cautionary statement that the covered document is not required to be available on the website for more than one year or, if later, after it is superseded by a subsequent version of the document.  It must also include a statement of the individual’s rights to request and obtain a paper version of a covered document, free of charge, to opt out of electronic delivery and receive only paper versions of covered documents, and an explanation of how to exercise this right.
 

Post-Employment Obligations

When a covered individual terminates employment, the plan administrator must take measures reasonably calculated to ensure the continued accuracy and availability of the electronic address or to obtain a new electronic address that enables receipt of covered documents following termination of employment.
 

Effective Date

The regulation will become effective on July 27, 2020, but the Department of Labor stated that it will not take any enforcement action against a plan administrator who relies on the safe harbor before that date. 

If you have any questions about the safe harbor, or if you would like to implement disclosure procedures for your retirement plan(s) that satisfy the safe harbor, please contact a member of our Employee Benefits Group.