chevron-down Created with Sketch Beta.
TIPS Health & Disability and Life Insurance Committees


February 2020

  By Shana Graves

By Shana Graves

Department of Labor Proposes New ERISA Safe Harbor

The Department of Labor (DOL) released a proposed rule on October 23, 2019, that would create a voluntary safe harbor allowing employee pension benefit plans to communicate certain required plan notices and disclosures electronically. The history of the proposed rule reflects it was developed in response to a 2018 Executive Order directing the DOL to find ways to improve effectiveness and reduce the cost of required voluminous paper notices and disclosures. In essence, this proposed rule reflects the modern realities of technology by offering a voluntary safe harbor for employers who want to make certain retirement plan disclosures accessible, such as on a website, as opposed to sending paper documents through the mail. 2

The proposed rule also includes a safe harbor for plan sponsors and administrators to provide notices on a website unless participants affirmatively request paper disclosure. The safe harbor generally requires the sending of a separate electronic notice each time a document is posted. Notably, the proposed rule permits one consolidated notice covering all of the following documents: summary plan description (SPD), summary of material modifications (SMM), summary annual report (SAR), annual funding notice, section 404a-5 investment-related disclosure, notice about default investment alternatives QDIA notice), and pension benefit statement. The consolidated notice must be provided annually. Documents posted under the proposed safe harbor would have to be maintained on the website until they are updated, changed, or become obsolete.

Although governmental pension plans are mostly exempt form ERISA notice and disclosure requirements, many implement rules applicable to the private sector as a best practice. The proposed safe harbor would allow for a “notice and access” disclosure model. Under this model, a covered document is posted online and individuals are provided a “notice of internet availability” (NOIA), which includes the website address where the covered document is available. Additionally, the plan administrator is required to furnish a one-time paper notification that some, or all, covered documents are provided electronically to an electronic address. Pursuant to the Rule, participants are informed of the right to request paper copies of individual documents, or to opt-out from electronic delivery.

The final regulation is effective 60 days after publication. The adoption of the new safe harbor, if implemented, by a plan is voluntary. Yet, the regulation would apply to plans that decide to adopt the electronic delivery safe harbor on the first day of the first calendar year following publication of the rule, meaning the earliest effective date would be January 1, 2021.