U.S. Department of Labor Announces Rule to Better Deliver Retirement Plan Information Options, While Saving Billions of Dollars for Plans
WASHINGTON, DC –The U.S. Department of Labor today announced publication of a final rule that expands the ability of private sector employers to communicate retirement plan information online or by email. The rule allows employers to deliver disclosures to plan participants primarily electronically, which will reduce printing, mailing, and related plan costs by an estimated $3.2 billion over the next decade. The rule will also make disclosures more readily accessible and useful for participants, but preserve the rights of those who prefer paper disclosures.
“This rule is an outstanding example of how commonsense deregulatory efforts can save billions of dollars,” said U.S. Secretary of Labor Eugene Scalia. “The rule will rely on widely available technology to keep workers and retirees informed about their plans, while still preserving the option to receive retirement information by mail. As we look ahead to reinvigorating the American economy, the Department of Labor’s priorities include eliminating unnecessary burdens for employers that sponsor retirement plans and on addressing the needs of wage earners, job seekers, and retirees.”
“This commonsense rule reflects today’s marketplace while retaining the ability of participants to choose how they receive their retirement information,” said Assistant Secretary of the Employee Benefits Security Administration Preston Rutledge.
On Oct. 22, 2019, the Department’s Employee Benefits Security Administration (EBSA) issued a proposed rule to allow plan administrators that satisfy certain conditions to notify retirement plan participants that required disclosures, such as a plan’s summary plan description, will be posted on a website. At the same time, participants can choose to opt out of electronic delivery or request paper copies of disclosures.
Following the Department’s proposal, plan sponsors and fiduciaries, plan service and investment providers, retirement plan and participant representatives, and other interested parties submitted several hundred written comments.
The final rule allows retirement plan administrators to furnish certain required disclosures using the proposed “notice-and-access” model. Retirement plan administrators also have the option to use email to send disclosures directly to participants. These administrators must notify plan participants about the online disclosures, provide information on how to access the disclosures, and inform participants of their rights to request paper or opt out completely. The new rule also includes additional protections for retirement savers, such as accessibility and readability standards for online disclosures and system checks for invalid electronic addresses.
The final rule furthers President Trump’s Executive Order 13847, “Strengthening Retirement Security in America,” which called on the Secretary of Labor to review actions that could be taken to make retirement plan disclosures more understandable and useful for plan participants, while also reducing the costs and burdens the disclosures impose on employers and plan administrators.
This rule also may help some employers and the retirement plan industry in their economic recovery from the disruption caused by the coronavirus pandemic. Many retirement plan representatives and their service providers, for example, have indicated that they are experiencing increased difficulties and, in some cases, a present inability to furnish ERISA disclosures in paper form. Enhanced electronic delivery offers an immediate solution to some of these problems.
The mission of the Department of Labor is to foster, promote and develop the welfare of the wage earners, job seekers and retirees of the U.S.; improve working conditions; advance opportunities for profitable employment; and assure work-related benefits and rights.