Skip navigation
DOL building

DOL Issues Final Electronic Disclosure Rule

The new rules are a good start at modernizing retirement plan communications.

Many plan advisors can remember when all retirement plan communications required postal-mail delivery. Fat envelopes with disclosure documents, performance reports and statements would arrive regularly at participants’ homes, often only to collect dust in the reading pile.

The Department of Labor has been working to update plan document delivery requirements to keep pace with communications technology. In 2002, the agency issued safe harbor regulations on the use of electronic media for required disclosures. That was a good start at modernizing communications and it was followed by subsequent field assistance bulletins and technical releases. This past May the DOL issued the 2020 safe harbor rules, which took effect on July 27, 2020.

Key Points

The 2002 safe harbor provisions remain effective but the new rules offer plans more flexibility. The main provisions include:

  • Electronic delivery can be used as the default option if certain conditions are met, but participants can still request paper delivery.
  • The safe harbor’s approved delivery methods apply only to retirement plans, not health and welfare benefits.
  • Administrators must inform all participants initially by paper notice about the new delivery methods, even if a participant had been receiving electronic notices previously under the 2002 safe harbor provisions.
  • Participants must provide an electronic address to receive documents electronically. This requirement can be satisfied with a valid email address or a mobile computing device/smartphone that can receive text messages.
  • The new rules allow two document delivery methods. With the notice-and-access method, plans notify participants that a disclosure document has been posted online and provide a link or web address to access the document. Posted documents must remain on the website for at least one year or until superseded by a subsequent version. Email delivery allows document attachment to the message or inclusion in the message body.


The new rules provide additional guidance on the required content and format for the initial paper notice and ongoing electronic communications. For example, the section covering the initial paper notification and right to opt out requires that notifications “must be written in a manner calculated to be understood by the average plan participant.” In addition, the administrator must identify the electronic address that it has on file for the participant and provide instructions on how to request free-of-charge paper copies and opt out of electronic delivery.

Emailed documents and documents stored online also must meet the same requirements; emails must include a message subject line that states “Disclosures About Your Retirement Plan.” Recipients should be able to read and print email messages easily; websites must be readable and searchable. Administrators must also take reasonable measures to protect confidentiality.

Invalid Electronic Addresses

Invalid email addresses or smartphone numbers are a stumbling block for electronic delivery and the new rule addresses that problem. The DOL notes that “The system for furnishing a notice of internet availability must be designed to alert the administrator of a covered individual’s invalid or inoperable electronic address.”

If a message bounces back from an invalid address, the administrator must attempt contact through a second electronic address or attempt to get a valid address from the participant. If those steps fail, “the administrator must furnish to the covered individual, as soon as is reasonably practicable, a paper version of the covered document identified in the undelivered notice of internet availability,” per the DOL regs.

Which party will handle email management will vary, according to Gayle Skolnik, partner with Faegre Drinker’s Benefits & Executive Compensation group.  In some cases, the employer will handle those responsibilities and in other cases it may outsource them to its plan recordkeeper or another vendor.  “Keep in mind, however, that where those responsibilities are outsourced to a vendor, the plan fiduciary remains ultimately responsible for ensuring compliance with the regulations, including the maintenance of electronic addresses for all individuals for whom the plan is relying on the safe harbor,” she cautioned in an emailed response.

A recent Faegre Drinker webinar (registration required) addressed the administrative concerns over invalid electronic delivery addresses. One suggestion: Collect personal email addresses to serve as a secondary address during the job application and exit interview processes. If the person is hired and subsequently leaves the employer, which usually terminates the work email address, the plan will have backup contact information. From a consultant’s perspective, this is a good time to start coordinating email address collection and sharing procedures with plan-clients’ third-party administrators and recordkeepers.

Potential benefits

Electronic delivery offers multiple potential benefits. Participants who choose this method will have immediate, convenient access to emailed or online documents. Plan administrators will have a simplified and faster delivery method for many of their participants, although the number of opt-outs will influence that result.

Cost savings are another benefit. For instance, the DOL estimates that 19 million participants currently receive summary plan descriptions and 50 million receive pension benefit statements. The estimated per-participant costs to distribute those disclosure documents on paper are $4.48 and $2.79, respectively. Based on projections for electronic delivery adoption rates for these and other plan documents, the agency projects about $3.2 billion in cost savings over the next 10 years. In an era of hypersensitivity over plans’ costs, those savings could be significant.

Getting Up to Speed

Michael MacLean, partner with Faegre Drinker’s Benefits & Executive Compensation group, recommends that plan advisors become sufficiently conversant with the new requirements so they can respond generally to plan fiduciaries’ questions about the feasibility and potential benefits and costs of switching to the new safe harbor and to recognize when to advise their clients to seek legal counsel for compliance advice. “Also, if the advisors conduct RFP processes or otherwise advise their plan fiduciary clients on the selection of record keepers and other service providers, then the advisors must be sufficiently conversant with the new safe harbor rules to evaluate the ability of service provider candidates effectively to assist plan fiduciaries in the design and implementation of systems and procedures to comply with the safe harbor rules,” he added via email.

TAGS: Technology
Hide comments


  • Allowed HTML tags: <em> <strong> <blockquote> <br> <p>

Plain text

  • No HTML tags allowed.
  • Web page addresses and e-mail addresses turn into links automatically.
  • Lines and paragraphs break automatically.