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DOL E-Disclosure Rule Recognizes Our New (Digital) Reality

The COVID-19 pandemic has forced us to find new ways to work through digital technology. Now, more than ever, an enormous percentage of our communications occur over the phone and online. The Department of Labor’s recent publication of final rules permitting electronic disclosure by retirement plans as a default method for delivery of required notices (the “e-Disclosure Rule” or “Rule”) is further recognition of this modern reality. What follows is a brief overview of the new e-Disclosure Rule.


The DOL published the long-awaited final e-Disclosure Rule on May 27, 2020. The Rule provides an additional alternative to the existing safe harbors that allow for electronic delivery of notices required under Title I of the Employee Retirement Income Security Act of 1974 (”ERISA”). The Rule is a welcome alternative to the existing safe harbors, released in 2002, which only permit electronic delivery if the intended recipient has either affirmatively agreed to receive electronic notices or has access to an electronic information system as an “integral part” of her employment duties. (See DOL Reg. § 2520.104b-1(c).) The e-Disclosure Rule now allows electronic delivery to act as the default form of notification for plan participants and beneficiaries, regardless of their employment duties.

Requirements for e-Disclosure – Covered Individuals:

The e-Disclosure Rule allows pension benefit plans subject to ERISA to provide required disclosures to “covered individuals” by posting the disclosure to a website or sending an e-mail or text message that attaches the disclosure or includes the disclosure in the body of the text message.

For purposes of the e-Disclosure Rule, “covered individuals” are individuals who voluntarily provide the plan administrator (or plan sponsor or employer) with an email address or smartphone telephone number where the individual is able to receive and view written documents.

An individual may also become a “covered individual” by being assigned a phone number or email address by their employer, so long as the number or address is not assigned solely for the purposes of providing disclosures required under ERISA. Each “covered individual” must be provided with an initial notice of default electronic delivery. This initial notice must explain, among other things, that the plan administrator will send notices electronically, identify the address or telephone number to which disclosures (or notices of disclosures) will be delivered, include instructions about how to access the disclosures, and provide the right to opt out. The initial notice must be provided on paper.

Plan administrators are required to adopt reasonable measures to ensure that electronic delivery addresses for covered individuals remain current and must design the electronic delivery system to alert the plan administrator if the electronic address is no longer valid, particularly when a participant severs from employment. Once the administrator is alerted that a communication is undeliverable, it must take specific steps to address the issue and ensure receipt of the communication by the intended recipient.

Requirements for e-Disclosure – Methods of Delivery:

The e-Disclosure Rule establishes two safe harbor methods by which electronic communications can be posted and delivered:

  1. Website Posting
    Required disclosures to covered individuals may be posted to an intranet or third-party service provider website. Each time a disclosure is posted to the website, the plan administrator must first provide the intended recipients with a Notice of Internet Availability (“NOIA”), which apprises the covered individual of the disclosure and its significance. The NOIA can be provided via e-mail or text message and must contain only the following pieces of information:
  • A prominent statement that reads “Disclosure About Your Retirement Plan”
  • A statement that reads “Important information about your retirement plan is now available. Please review this information.”
  • The title and a brief description of the disclosure
  • The web address (or hyperlink) where the disclosure is available
  • Statements regarding:
    • the covered individual’s right to a paper version of the disclosure, free of charge;
    • the covered individual’s right to opt out of electronic delivery and instructions regarding how to do so; and
    • how long the disclosure is required to remain on the website.
  • A telephone number to contact the plan administrator or another plan representative

NOIAs must be provided separately from any other documents or disclosures under the plan, and prior to the posting of any disclosure. A special rule, however, allows plan administrators to provide a consolidated NOIA on an annual basis that will cover most required disclosures. Required disclosures must remain available on the website for at least one year following posting, or until superseded by a subsequent disclosure. In addition, disclosures must be searchable and presented in a widely available format (such as a PDF).

2. E-mail or text message delivery
As an alternative to website posting, plan administrators can deliver required disclosures to covered individuals using the personal e-mail address, assigned company e-mail address, or mobile phone number provided by the individual. The e-mail or text message must include the required disclosure either in the text of the e-mail or text message, or as an attachment. In addition, the e-mail or text message must include information similar to that required to be included in the NOIA, with the exception of information regarding posting of the information to a website.

The e-mail or text message communication must be written in a manner calculated to be understood by the average plan participant and, like notices delivered by posting to a website, must be searchable and provided in a widely available format.

Limits on Use of the e-Disclosure Rule:

According to the terms of the e-Disclosure Rule, the Rule applies only to required disclosures that must be delivered on behalf of pension benefit plans under Title 1 of ERISA (for example, summary plan descriptions (SPDs), Summaries of Material Modifications (SMMs), the Summary Annual Report (SAR), and fee disclosures for retirement plans). Accordingly, the additional electronic delivery safe harbor is not available for use by welfare benefit plans (for example, health, dental, and vision insurance plans). The preamble to the e-Disclosure Rule explains that the DOL “will continue exploring” whether to extend the Rule to welfare benefit plans in the future.

The e-Disclosure Rule also does not apply to disclosures required solely under the Internal Revenue Code, such as a 401(k) plan safe harbor design notice or a rollover notice under Section 402(f) of the Code. A separate, somewhat cumbersome, electronic delivery safe harbor described in Treasury Regulation § 1.401(a)-21 applies to such notices. Finally, the e-Disclosure Rule cannot be used when responding to a request for documents under Section 104(b)(4) of ERISA, which allows participants to request copies of documents key to the establishment and operation of the plan.

Effective Date of the e-Disclosure Rule:

The final e-Disclosure Rule takes effect 60 days after its publication date (July 27, 2020). However, the DOL has announced a non-enforcement policy that allows plan administrators to use the Rule immediately. The utility of the immediate use is somewhat limited because of the requirement that recipient of electronic disclosure must first receive an initial notice in paper form.


Employers and administrators have long sought efficient and inexpensive ways to comply with the myriad disclosure requirements under ERISA. For many employers – particularly those with large segments of their workforce that do not have access to computers as an “integral” part of their jobs or that sponsor plans with large retiree participant populations – the existing safe harbors for electronic delivery were a source of anxiety and expense. The e-Disclosure Rule provides some relief in that it will allow plan administrator to take advantage of two new forms of electronic delivery as the default method of providing disclosures required under ERISA, so long as the intended recipient can be reached electronically and receives an appropriate initial notification.

If you have questions regarding the E-Disclosure Rule, or how it can be applied to support your retirement plans, please contact a member of the Employee Benefits & Executive Compensation Group at Verrill.

Topics: COVID-19, Retirement Plans
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