New Electronic Distribution Rules for Retirement Plan Documents

The Department of Labor (DOL) recently released a new rule that allows employers to post retirement plan disclosures on a website or deliver them by email as a default. This new rule creates a “safe harbor” that is designed to make disclosures more easily accessible to workers and help employers save on printing and mailing costs. Although the new rule became effective July 27, 2020, no action will be taken by the DOL if employers have used the new method sooner because of the COVID-19 pandemic.

The new rule is voluntary. It applies only to “covered documents” for the NRECA-sponsored Retirement Security (RS) and 401(k) Pension Plans that are required under ERISA. Examples include the summary plan description, summary of material modifications, and summary annual report.

Existing methods may still be used
Paper copies furnished either by mail or by hand are always acceptable.

The existing “wired at work” electronic delivery rules, in which paper is the default delivery method, have not changed. The “wired at work” rules must be used to deliver NRECA Group Benefit Plan documents electronically, and can also voluntarily be used to deliver NRECA-sponsored retirement plan documents electronically.

In addition, temporary, good faith electronic delivery relief for both retirement and Group Benefit Program documents is permitted until 60 days after the declared end of the COVID-19 national emergency. This relief, described on the COVID-19 page and the Distributing Plan Documents page of the Employee Benefits website, provides a third option for employers that need to distribute ERISA-covered disclosures electronically due to restrictions imposed by the pandemic.

How the new rule works
The 2020 safe harbor permits employers to use electronic delivery as the default delivery method for covered retirement plan documents if certain “notice and access” requirements described in the rule are met. Those requirements include, but are not limited to:

Sending an initial paper notice to each worker stating certain retirement plan documents will be delivered electronically, listing the specific address on file for the individual that will be used to send their disclosures, and offering them the chance to opt out of electronic delivery.
Choice of two delivery options: posting to a website (accompanied by a “Notice of Internet Availability”) or by emailing the document as an attachment or in the body of an email that also contains similar content to the “Notice of Internet Availability.”
Notifying participants electronically using a “Notice of Internet Availability” when the documents are available. This new notice must include a specific title, identify the documents provided, and give instructions for how to access the documents and opt out of electronic delivery.
If an employer posts the documents online, the site must house the covered documents for at least one year, or until a newer version is available.
Employers who use the safe harbor must have a system capable of maintaining email or smartphone addresses and tracking those who opt out. They must also take steps to resolve invalid addresses by first obtaining a new address or treating the covered individual as if they opted out of electronic delivery.
Employers must verify and update electronic addresses for terminating employees at the time of termination.
Other rules are in place that cover which documents may be announced using a single Notice of Internet Availability and what must happen if covered documents become temporarily unavailable online. Employers may not issue company email addresses to workers solely for the purpose of delivering pension benefit plan documents.

For full details about the new safe harbor for electronic delivery, see the Distributing Plan Documents page of the BA Guide.

If you have specific questions about implementing the new rule, contact the benefits compliance team at 866.673.2299, option 7, or pension.compliance@nreca.coop.

This summary of the regulation is not intended to constitute legal advice. Please consult your co-op’s legal advisor for guidance.