DOL Proposes New Electronic Disclosure Safe Harbor for Retirement Plans
by Vita, on October 28, 2019
The Employee Benefits Security Administration of the Department of Labor (DOL) recently announced a proposal for new “safe harbor” guidelines governing electronic distribution of important ERISA disclosures.
Under current DOL and IRS regulations, employees must affirmatively agree to receive ERISA and other welfare and retirement plan disclosures electronically. Plan sponsors incur varying degrees of financial and administrative burden in obtaining such agreements, or in using non-electronic methods to deliver these important disclosures.
The proposed safe harbor rules would allow participants to opt-out of electronic distribution and continue receiving paper notifications, rather than having to opt-in. Importantly, plan sponsors will be required to notify plan participants of their right to opt-out before defaulting to an electronic distribution protocol.
The new safe harbor rules intend to simplify employee benefit plan disclosures and alleviate some of the financial and administrative burden. DOL estimates that expanded use of web and cloud-based technology will save employers over $2 billion in the next ten years.
DOL has invited interested parties to provide feedback and additional information regarding this proposal. Vita will provide updates as the proposal moves through the review process.