The Department of Labor proposed a rule Tuesday that would permit default electronic delivery of retirement plan disclosures.
The proposal, crafted by the Employee Benefits Security Administration, offers a safe harbor for employers who want to make retirement plan disclosures accessible on a website, rather than sending volumes of paper documents through the mail. The move would save an estimated $2.4 billion over the next 10 years for Employee Retirement Income Security Act-covered retirement plans by eliminating materials, printing and mailing costs, according to a Labor Department fact sheet.
Participants who prefer printed disclosures would have the ability to opt out of electronic delivery. Moreover, a plan administrator may not default a participant into electronic delivery unless the participant has an email address and notifies the participant by paper that retirement documents will be furnished electronically.
Will Hansen, chief governmental affairs officer at the American Retirement Association in Washington, is supportive of the proposal. "It is a common sense rule that will increase the effectiveness of participant disclosures while still protecting those participants that desire a paper copy," he said.
The proposal comes after President Donald Trump signed an executive order in August 2018 directing the Labor Department to review how retirement plan disclosures required under ERISA could be made more understandable and useful for participants and beneficiaries, while also reducing the costs and burdens they impose on employers and other plan fiduciaries responsible for their production and distribution.
The proposal also includes a request for information on whether additional steps could be taken to improve participants' retirement plan disclosure experiences.
"This proposal offers Americans choice in how they receive important retirement information," said Secretary of Labor Eugene Scalia in a news release. "By adjusting for modern technology, the department can help save billions of dollars in costs for the U.S. economy. The U.S. Department of Labor is focusing on rulemaking that eliminates unnecessary burdens while furthering the needs of the wage earners, job seekers and retirees of the United States."
Broadly speaking, Christopher Spence, senior director of federal government relations for TIAA-CREF in Washington, said his company supports default electronic delivery but is still reading through the proposal. "We're looking forward to digging down into what's in the proposal and seeing what they came up with," he said.
The rule is scheduled to be published Wednesday in the Federal Register and will then have a 30-day comment period.