Bipartisan legislation to allow plan sponsors to use e-delivery as the default distribution method for ERISA required retirement plan documents was reintroduced in the Senate in the waning days of the 115th Congress.
The “Receiving Electronic Statements to Improve Retiree Earnings (RETIRE) Act” (S. 3795) would permit retirement plan sponsors to automatically enroll participants in electronic delivery for plan communications, while providing an opt-out option for employees who prefer to continue receiving paper documents.
Sens. Sherrod Brown (D-OH) and Mike Enzi (R-WY) had previously introduced the legislation in September 2016, but this year they were joined by Sens. Johnny Isakson (R-GA), Doug Jones (D-AL), Gary Peters (D-MI) and Rob Portman (R-OH) as original cosponsors.
Under the legislation, the delivery system must be designed to result in “effective access” to the documents through electronic means. Three methods would be considered to meet the "effective access" prong:
- direct delivery of the material to an electronic address;
- posting of material to a website to which access has been granted and proper notice of the posting has been provided; or
- any other electronic means reasonably calculated to ensure actual receipt.
In addition, the participant must be able to modify their delivery preference at any time and be able to elect to receive paper documents at no additional cost. Participants must also receive an annual paper notice describing their delivery options.
Companion legislation (H.R. 4610) sponsored by Reps. Jared Polis (D-CO) and Phil Roe (R-TN) was introduced in the House in December 2017 and currently has 42 cosponsors.
The fact that S. 3795 was reintroduced with additional bipartisan support suggests that there will be strong momentum for enactment in the next Congress beginning in January.
The American Retirement Association has been a strong proponent for allowing e-delivery as the default method; last April, ARA CEO Brian Graff announced an e-delivery campaign at the opening general session of the 2018 NAPA 401(k) Summit in Nashville.
NAPA and the ARA partnered with the Investment Company Institute to examine the economic impact of the current 401(k) disclosure regime. As part of that effort, the organizations commissioned a study which outlined a number of compelling reasons to shift the default method to electronic delivery, including that approximately $500 million a year is unnecessarily spent on paper disclosures. Based on the average 401(k) account balance, that equates to 2.5% in lost retirement savings over a participant’s working life.
In addition, the ARA and ICI staffs met with the Labor Department in September to discuss the study’s implications and submitted a follow-up letter addressing a number of questions raised during to the meeting.