ARA Responds to DOL on E-Delivery Considerations

Although recently overshadowed by the buzz around multiple employer plans, the American Retirement Association recently met with the Labor Department about another aspect of President Trump’s Aug. 31 Executive Order.

In April, the ARA and the Investment Company Institute released an updated version of a study about the costs of the current default of paper delivery of participant notices – more than $500 million a year – and the multiple advantages of a shift to an e-delivery default.

Following that release, the ARA and ICI met with the Labor Department to discuss the study’s implications, during which several questions were raised – and now, following President Trump’s Executive Order calling for, among other things “…a review of actions that could be taken through regulation or guidance, or both, to make retirement plan disclosures required under ERISA and the Internal Revenue Code of 1986 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 ARA has responded to those questions, specifically:

  • whether the Department has the requisite authority to make electronic delivery the default method for communicating with participants and delivering plan information;
  • whether default electronic delivery satisfies ERISA’s requirement for “furnishing” certain documents;
  • whether an annual notice by postcard should be sent to enrolled participants not taking advantage of electronic delivery to ensure that participants are aware of the ability to request disclosures and other plan communications;
  • whether evidence shows that participants are more likely to read material that is electronically delivered than material delivered in paper format; and
  • whether the rate of access to high-speed internet in rural areas is relevant to a determination regarding the use of electronic delivery as a default method of communicating plan information and required notices.

The ARA/ICI response to Assistant Secretary of Labor Preston Rutledge notes that the Labor Department has broad authority to issue regulations to interpret ERISA, including specifying how statutorily required notices may be delivered, and that default electronic delivery (already permitted under certain conditions) satisfies ERISA’s requirement to furnish certain notices to participants and beneficiaries. Broadly supportive of the use of something like a postcard to remind participants of both online resources as well as to remind them of a paper option, the response also explains that participants who avail themselves of online features are “more likely to take positive actions such as increasing their contributions.”

As for access, the ARA/ICI letter acknowledge the issue, but outlines several reasons why the rate of access to broadband internet is not relevant, including that:

  • access to broadband internet or high-speed mobile LTE services is nearly universal, regardless of urban or rural location;
  • U.S. adults report high rates of internet use across urban and rural locations;
  • working U.S. adults – the segment of the population participating in workplace plans – have even higher rates of internet use; and
  • high-speed or broadband internet is not necessary for downloading and viewing DC plan disclosures.

Finally, of course, the letter notes that under any proposal to be considered, every participant will have the right to opt to receive notices in paper.

You can read the full letter and detailed explanations here.

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