DOL (Finally) Considers Changes to Electronic Disclosure Rules

The Department of Labor’s Employee Benefits Security Administration (EBSA) has determined that it may be time to update the rules regarding electronic disclosures. (The current rules were published back in 2002.) Accordingly, EBSA has issued a Request for Information (RFI) soliciting views, suggestions, and comments to determine whether to expand or modify the rules regarding electronic distribution of employee benefit plan information under ERISA.

Specifically, EBSA has asked for comment on whether, and if so how, the electronic disclosure rules should be revised. EBSA has also asked for feedback on whether the rules should include different rules for different types of benefit plans, disclosures, or recipients, and whether electronic disclosure should be encouraged or required. Finally, EBSA has asked for information on a variety of specific topics, including access to/use of the Internet, popularity of supplying participant disclosures electronically, and technological matters.

EBSA encourages comments to address any matters germane to this topic, but it has set forth 30 questions to facilitate consideration of the issues. Comments need not address all, or even any, of those questions. The questions fall into four general categories: access and usage, whether/how the rules should be updated, technological matters, and costs/benefits of expanding the rules. Some questions are open-ended, while others ask for specific information. Though the questions are many and varied, there are some common themes:

• What are the advantages and disadvantages of the electronic disclosure, from both the plan sponsor and participant perspectives?
• What about the current regulations is troublesome or frustrating?
• How and with what frequency do participants access and use electronic media?
• How should the current rules be modified or expanded, taking into account current and future technology, administrative matters, best practices, and the need to protect plan participants?
• Should different rules apply to different types of plans, disclosures, or recipients?
• Should electronic disclosure be encouraged? Should it be automatic or required?
• Under what circumstances should participants be able to opt out of electronic disclosure?

Many of our clients have expressed frustration with the current electronic disclosure rules, and we have often heard that while our clients have the technology and the will to properly deliver disclosure materials electronically, the current safe harbor’s limitations have constrained (and in some cases prevented) their efforts to do so. We are encouraging clients to respond to the RFI, as it is an important opportunity for them to convey their concerns with the current rules, provide EBSA with useful information, and suggest methods for improving the rules. To assist them with this endeavor we are accepting their comments, which we intend to compile and submit on a no-name basis on their behalves.

Although we expect EBSA to receive a large volume of comments from a variety of interests, all interested employers, plan sponsors, administrators, service providers, and others should seriously consider submitting a response, not only because this is a chance to shape the disclosure regulations to which anyone involved with or covered by a health or retirement benefit plan are subject, but also because this opportunity is unlikely to repeat itself anytime in the near future. Comments are due by June 6, 2011.