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DOL Issues Policy on Electronic Disclosure of 401(k) Fees
Safe harbor allows new participant fee statements to be delivered electronically—under certain conditions

By Stephen Miller, CEBS  9/14/2011

Updated 12/8/2011

The U.S. Department of Labor (DOL) issued Technical Release 2011-03 on Sept. 13, 2011, setting out an interim policy regarding the use of electronic media to satisfy disclosure requirements under the department’s final participant-level fee disclosure rule.

Update:
DOL Revises Interim e-Disclosure Policy

On Dec. 8, 2011, DOL issued Technical Release 2011-03R, which revised the department’s interim policy regarding the use of electronic media to satisfy the disclosure requirements under the department’s final participant-level fee disclosure regulation.

The revised technical release is identical to Technical Release 2011-03 except to clarify that (1) fee disclosure via continuous access websites are permissible if the administrator complies with the conditions in the technical release, and (2) investment-related information under paragraph (d) of the participant-level fee disclosure regulation may be furnished as part of, or along with, a retirement plan benefit statement, either electronically under the conditions in the technical release or in paper form.

To learn more, see the SHRM Online article "DOL Offers More Guidance on Electronic Fee Disclosure."

The participant fee disclosure rule requires employers to disclose more information about plan and investment costs to workers who direct their investments in 401(k) and other defined contribution retirement plans covered by the Employee Retirement Income Security Act (ERISA). Under the final rule, plans generally have until at least Aug. 30, 2012, to start giving better information on 401(k) and similar plan fees and expenses to an estimated 72 million participants (see “DOL Final Rule Extends Deadlines for Service Provider and Participant-Level Fee Disclosures by 3 Months”).

The relief in the technical release is limited to the disclosures required under the final rule. The policy allowing electronic disclosure will stand pending further review by  DOL officials, and could be changed after such a review.

Safe Harbor Conditions

The interim policy states that the DOL will not take enforcement action based solely on a plan administrator’s use of electronic technologies to make the required fee disclosures if the administrator complies with the conditions in the technical release. Among these conditions, plan administrators may furnish fee disclosure information electronically—including via e-mail or a through a website, with proper notice of online availability—if recipients meet one of the following requirements:

Integral part of duties.The safe harbor applies to participants who have the ability to access documents furnished in electronic form effectively at any location where the participant is reasonably expected to perform his or her duties as an employee and with respect to whom access to the employer’s electronic information system is an integral part of those duties.

Affirmative consent. The safe harbor applies to other participants (e.g., retirees, former employees and active employees who do not use a computer as an integral part of their duties), beneficiaries (e.g., surviving spouse, alternate payees) and other persons entitled to disclosures under ERISA who affirmatively consent to receiving disclosures through electronic media in the manner prescribed by the regulation.

The Pension Benefits Statement

The policy further states that fee disclosures included in a pension benefit statement may be furnished in the same manner that other information included in the same pension benefit statement is furnished. For example, if the pension benefit statement information is furnished through a secure continuous access website, then fee disclosures included as part of the pension benefit statement can be furnished electronically in the same manner.

For fee disclosures furnished outside of the pension benefit statement, plan administrators may electronically disclose this information to participants and beneficiaries who voluntarily provide an e-mail address for the purpose of receiving disclosures if the plan administrator:

Provides participants and beneficiaries with initial and annual notices that meet specified requirements.

  Takes appropriate measures to confirm that individuals are actually receiving the electronic transmissions.

  Takes appropriate measures to protect the confidentiality of personal information in the electronic delivery system.

  Meets other specified requirements.

“This technical release responds to requests by some plan sponsors and service providers to expand the ability of ERISA plans to use modern electronic disclosure technologies to communicate with plan participants while ensuring that all workers will benefit from the increased transparency provided by our fee disclosure rule,” Assistant Secretary of Labor for the Employee Benefits Security Administration Phyllis C. Borzi commented in a released statement.

Stephen Miller, CEBS, is an online editor/manager for SHRM.

Related Articles—SHRM: 

DOL Final Rule Extends Deadlines for Service Provider and Participant-Level Fee Disclosures by 3 Months, SHRM Online Benefits Discipline, February 2012

Sample Glossary of Investment-Related Terms for Disclosures to Retirement Plan Participants, SHRM Online Benefits Discipline, December 2011

Related ArticleExternal:

Quarterly Benefit Statement and the Participant Fee Disclosure Regulations, SunGard Relius, October 2011

Quick Links:

SHRM Online Benefits Discipline

SHRM Online Retirement Plans Resource Page

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