The preparation of retirement plan account statements has traditionally required a great deal of paper, ink, time, and money. Printed statements that are mailed to plan participants are not environmentally friendly, are less secure, require more staff labor, and add extra costs to the administration of a retirement plan. With that in mind, a new e-delivery rule from the Department of Labor (DOL) could benefit your plan in a variety of ways.

The new e-delivery rule, issued by the DOL in May 2020, took effect on July 27, 2020. It allows certain plan notices to be sent electronically. However, plan participants must be notified first of the option to receive a paper copy. In addition, you must have an email address on file for each plan participant, and you must reasonably expect your email to reach them at that address.

Under this new rule, you are required to have a process in place for dealing with electronic transmissions that are returned as undeliverable. You are not allowed to charge more for paper delivery. In addition, plan participants must be able to easily opt out of e-delivery.

If plan participants choose to opt out of e-delivery, they have the right to change their minds at any time. To remain compliant, you should make it clear to them that this decision is theirs to make whenever they choose. You are also required to include the email address to which you’ll be sending documents in the first such transmission so the participant has a chance to review it.

Disclosures must be maintained on a website, if that is where they are made available, for at least one year, or until they are superseded. Further responsibilities of plan administrators include taking reasonable efforts to ensure participants who have left their jobs can still be reached electronically.

This new legislation does not change the required timing for disclosures, so teams preparing these documents should continue to adhere to the same schedule. It is acceptable to send a single Notification of Internet Availability (NOIA) every 14 months for any ERISA-required disclosure that can be delivered annually and is not tied to a specific event. This does not include quarterly benefit statements.

Benefits to Retirement Plan Statement E-Delivery

The new DOL rule has many benefits. The National Association of Plan Advisors reports that 51% of plan participants selected personal email as a preferred method of contact. Similarly, 44% of participants like to get information about their retirement accounts via a company website. Only 32% enjoy receiving a notice mailed with their account statement, and an even smaller 29% prefer getting a separate account statement and mailed letter.

When asked to choose just one method of communication, about one-quarter of respondents chose personal email. In short, plan participants agree: the less expensive, easier-to-automate, and environmentally friendly choice is best.

Consider the following:

  • Security of plan information has never been more important, and certain types of electronic access (website logins, but not email, for instance) protect sensitive information with passwords, PINS, or two-factor authentication.
  • Electronic information can elicit more interaction from plan participants—this has even been known to increase savings rates by 23%.
  • It’s easier to measure open rates and other interaction metrics when delivering via email.
  • Significant time and cost savings are realized when preparing e-statements and disclosures; this cost savings is passed down through the plan and ultimately benefits both plan providers and participants.
  • E-delivery methods allow those with visual impairment and certain other disabilities better access to their plan documents, thanks to the ability to adjust lighting, text size, and fonts.
  • Electronic disclosures allow for simple translation for participants preferring to read in other languages.

Best E-Delivery Options

If available, a website login would be the most secure choice for plan participants when accessing their retirement account information. Your plan sponsor may not have control over this, however, as this policy decision is typically set by the plan’s Recordkeeper.

At the present time, many Recordkeepers offer an electronic delivery option for retirement plan disclosures. In nearly all cases, participants are required to log in to a secure website or portal to access plan documents, as opposed to directly emailing or texting these documents.

E-Delivery Benefits All Involved

As long as they remain compliant with the new DOL rule, it is up to your Recordkeeper whether e-delivery should be treated as the default method of communication, thereby requiring an opt-out by the participant. Additionally, some Recordkeepers have a “notice delivery service” and it is up to the plan to decide whether they want to opt in to this service or not.

If you have questions about your responsibilities under the new e-delivery rule or would like additional information about why it is beneficial, contact DirectAdvisors by email at [email protected], or by phone at 518-362-2119. We are happy to help plan Recordkeepers understand their e-delivery obligations and how they can best serve their plans’ participants.