You don’t still use a flip phone? The DOL’s new proposed electronic disclosure safe harbor

https://www.linkedin.com/pulse/you-dont-still-use-flip-phone-dols-new-proposed-safe-harbor-ivcevich

What were you doing in 2002 and what did your phone look like? We would venture that your phone wasn’t your main hub for how you access & digest information. It was probably intended to make phone calls and maybe send some text messages. As technology has changed, the DOL has decided to offer up a second safe harbor for the electronic delivery of required plan notices.

Many plan sponsors are unaware of the relatively high bar to achieve the 2002 safe harbor. Under the current safe harbor, employees had to have notices (think summary plan descriptions, fee disclosures, safe harbor testing disclosures, summary of material modifications, black out notices, qualified default investment alternative notices, auto-enrollment and escalation notices…did I miss any) either delivered by hand, first class mail, or electronically IF participants have electronic media at work or have consented affirmatively to allowing electronic delivery.

There aren’t many plan sponsors that meet this bar for employees and even fewer who meet this bar for terminated participants who maintain balances and beneficiaries. Fortunately, the DOL has offered up a 2nd safe harbor to meet your disclosure requirements (a shade under 17 years, thanks Big Paper and the AARP lobby)!

The new safe harbor would be optional for plan sponsors and could be used to communicate to plan participants who either provide an electronic address (which could include a phone number for a smartphone) to the plan sponsor or have an electronic address assigned by an employer. Under the proposed rule, plan participants would need to receive both:

-a one-time paper disclosure stating that some or all disclosure documents will be furnished electronically, and

-for each required disclosure, an electronic notice of internet availability with a brief description of the document(s) and instructions on how to access information on the website.

Participants must also be notified of their right to receive paper copies of some or all plan notices. The website hosting the disclosures must also meet certain requirements. This new proposed rule would help alleviate some of the burden. It is far from perfect and more importantly it isn’t a final rule but as plan sponsors are going through their annual disclosures and wondering why you have to mail these things (mainly), you now know the reason and the alternatives. #401k #QPRetirement #403b