• The U.S. Department of Labor (DOL) has published proposed rules for an alternative safe harbor approach for electronic disclosure of documents that must be provided to participants and beneficiaries in retirement plans under the Employee Retirement Income Security Act of 1974 (ERISA).
  • The new safe harbor may be used to electronically provide any documents that must be furnished by a pension plan under Title I of ERISA, except for any document that must be furnished upon request. For example, the new safe harbor can apply to the disclosure of pension benefit statements, summary annual reports, summaries of material modification and blackout notices.
  • In contrast, the new safe harbor would not apply to any plan documents that an eligible person requests in writing. Additionally, the new safe harbor does not apply to employee welfare benefit plans, such as plans providing group health or disability benefits.

The U.S. Department of Labor (DOL) on Oct. 23, 2019, published proposed rules for an alternative safe harbor approach for electronic disclosure of documents that must be provided to participants and beneficiaries in retirement plans under the Employee Retirement Income Security Act of 1974 (ERISA). The new safe harbor would not replace the current safe harbor rules governing electronic disclosure that were issued in 2002, but would instead give ERISA retirement plans another way to comply with ERISA's disclosure requirements.

Below is an overview of the new alternative safe harbor:

"Covered Individual" and "Electronic Address"

Unlike the current safe harbor, the new alternative safe harbor applies to only one category of "covered individuals" and no affirmative consent is required. A "covered individual" is any participant, beneficiary or other individual entitled to documents under ERISA who provides an electronic address. An electronic address can be an email address or the phone number for a smartphone or other internet-connected mobile device. If an employer assigns an employee an electronic address, then the employee is deemed to have provided an electronic address. If a covered individual terminates employment with the employer, the plan administrator must take reasonable measures to ensure that the covered individual's electronic address is still accurate or obtain a new electronic address.

"Covered Documents"

The new safe harbor may be used to electronically provide any documents that must be furnished by a pension plan under Title I of ERISA, including 401(k) plans and employee stock ownership plans, except for any document that must be furnished upon request. For example, the new safe harbor can apply to the disclosure of pension benefit statements, summary annual reports, summaries of material modification and blackout notices. In contrast, the new safe harbor would not apply to any plan documents that an eligible person requests in writing.

Additionally, the new safe harbor does not apply to employee welfare benefit plans, such as plans providing group health or disability benefits.

Initial Notice Requirements

Prior to first relying on the new safe harbor, the plan administrator must furnish to each individual to be covered by the safe harbor an initial notice. This initial notice must inform the individual 1) that electronic delivery will be the default method of delivery; 2) that he or she has the right to request and obtain a paper version of a covered document, free of charge; and 3) that he or she has the right to completely opt out of receiving covered documents electronically. The notice must also explain how to exercise these rights.

"Notice of Internet Availability" Requirements

After providing the initial notice, the plan administrator must furnish to each covered individual a "notice of internet availability" for each covered document, though for certain documents a single "consolidated" notice of internet availability can be issued. A notice of internet availability that is not a combined notice must be furnished at the time the covered document is made available online.

The notice of internet availability must contain the following information, written in a manner that would be understood by the average plan participant:

  • a prominent statement that reads "Disclosure About Your Retirement Plan"
  • a statement that reads "Important information about your retirement plan is available at the website address below. Please review this information"
  • a brief description of the covered document
  • the website where the covered document is available, sufficiently specific to make the covered document readily accessible (can be satisfied by providing a link directly to the covered document or to a login page that upon login immediately provides a prominent link to the covered document)
  • a statement that the covered individual has the right to receive a paper version of the covered document, free of charge, and an explanation of how to exercise this right
  • a statement that the covered individual has the right to opt out of receiving covered documents electronically, and an explanation of how to exercise this right
  • a telephone number to contact the plan administrator or other designated plan representative

The notice of internet availability must be sent electronically to the provided electronic address and contain only the content described above, though non-misleading pictures, logos or other designs are permitted. The notice of internet availability must also generally be sent separately from any other documents or disclosures.

Requirements for Consolidated Notice of Internet Availability

The new safe harbor permits a plan administrator to furnish one notice of internet availability that covers some or all of the following documents:

  • the summary plan description
  • a summary of material modification
  • the summary annual report
  • the annual funding notice
  • certain required investment-related disclosures
  • the qualified default investment alternative (QDIA) notice
  • the pension benefit statement

A consolidated notice must satisfy the notice of internet availability content requirements described above. A consolidated notice must be furnished each plan year, and if a combined notice was furnished in the prior plan year, a new combined notice must be provided no later than 14 months following the date that the prior year's combined notice was furnished.

Website Requirements

The website providing access to the covered documents must meet certain requirements to comply with the new safe harbor. Specifically, the plan administrator must take measures reasonably calculated to ensure that:

  • the covered document is available on the website no later than the date on which the covered document must be furnished under ERISA
  • the covered document remains on the website until it is superseded by a new version of the covered document
  • the website presents the covered document in a manner that can be understood by the average plan participant
  • the covered document is presented on the website in a common format or formats that can be both read online and printed on paper and that can be downloaded and permanently retained in electronic format (such as PDF)
  • the covered document can be searched electronically by numbers, letters, or words
  • the website protects the confidentiality of personal information relating to any covered individual

Effective Date

Under the proposed rules, the new alternative safe harbor will not become effective until 60 days after the final rules are published. The DOL is accepting comments on the proposed rules for the 30-day period following Oct. 23, 2019. The proposed rules cannot be relied upon by plan sponsors until the final rule is published.