The DOL recently released guidance permitting plan administrators to satisfy fiduciary requirements for fee disclosures concerning participant-directed individual account plans (such as 401(k) plans) through electronic media in certain circumstances. Technical Release 2011-13 provides for an interim policy on electronic media and is expected to be finalized before participant fee disclosures are required to be distributed next year.
Under the participant disclosure rules, plan fiduciaries are required to disclose comprehensive information relating to plan and investment costs and fees to participants in 401(k) and similar plans. Plan fiduciaries generally have until May 31, 2012 to provide this information. The DOL has provided Technical Release 2011-13 because it expects that plan fiduciaries will desire to provide this information electronically.
The DOL's previous guidance on electronic disclosure stated that plan fiduciaries could provide “pension benefit statements” electronically to:
(a) participants who are able to effectively access electronic documents at any location where the participant is reasonable expected to perform his or her duties and for whom access to the electronic information system is an integral part of his or her duties, and
(b) other participants who have affirmatively agreed to receive disclosures through electronic media. Pension benefit statements are required to contain specific disclosure statements as well as statements as to the value of investments contained in a participant's account, and the vested status of a participant's account.
Under Technical Release 2011-13, disclosures required under the participant disclosure rules that are included in a pension benefit statement may be provided in the same manner that a pension benefit statement is furnished. For disclosures required under the participant disclosure rules that are not included in a pension benefit statement, the plan fiduciary may provide such disclosures electronically to the participants described in (a) and (b) above (the “Safe Harbor”), or, pending further guidance, may provide disclosures electronically in compliance with particular notification conditions. The administrator must:
Provide an initial notice to the participant that includes certain information, including
- a statement advising participants that providing their e-mail address to receive disclosures electronically is voluntary;
- a description of the information that will be furnished electronically and how it can be accessed;
- the availability of a paper copy;
- the ability to opt out of electronic delivery at any time; and
- the procedure for updating the e-mail address.
- Provide an annual notice that includes most of the same required information.
- Write all notices in a manner calculated to be understood by the average plan participant.
- Take appropriate measures to confirm that the information transmitted successfully.
- Take appropriate measures to protect the confidentiality of information transmitted electronically.
Since Technical Release 2011-13 provides interim guidance only, final guidance may vary, but we do not expect any changes to be significant. Plan fiduciaries should ascertain whether they are able to comply with the Safe Harbor set forth above with respect to disclosures not included in a pension benefit statement, and if not, prepare to comply with the DOL’s notification conditions