New Regulation Allows Internet Waivers of Rights
The Treasury Department issued final regulations under the Paperwork Reduction Act permitting private retirement plans to provide certain required notices by computer rather than first-class mail. The regulation also permits employees and their spouses to give up specified rights by electronic means.
The regulation provides standards by which retirement plans are permitted to use an electronic medium to transmit notices to employees participating in the plan. In order for a plan to provide notices to participants using the internet, the participant must consent to receive the communication electronically. The regulation only pertains to notices covered by Treasury rules, not to those relating to Labor Department rules.
The rule provides for a general exemption to the consent requirement if the recipient of the notice is “effectively able to access” the electronic medium. In such a case, consent is not required before a plan gives notice over the internet where the participant has access to the electronic medium. The electronic notices must be as easy to understand as if the notice were provided in a written document. The most common form of an electronic notice will be an email or internet posting, but it may also be a pre-recorded voice message.
Electronic Consents and Waivers
The final regulation allows employees and their spouses to give up their rights electronically to lifetime pension payments. For example, employees who have the choice to take their pensions as lump sums rather than as annuities could make this choice electronically.
Spouses will also be able to give up their rights to survivor annuities electronically. The regulation permits plans to capture the spousal consent through the use of an electronic signature capture pad. The new rule retains the requirement that a plan administrator or notary must physically witness the signature of a spouse waiving a right to a form of benefit under the plan. If the spouse’s signature is witnessed by a notary, the rule allows the notary to electronically communicate the consent to the plan. When spousal consent is provided electronically, the electronic signature must be stored by the plan in a manner making it available for future reference.
The regulation was issued on October 20, 2006 and applies to all notices and elections made on or after January 1, 2007.
Read the final regulation
Read comments on the proposed rule submitted by the National Women’s Law Center, the Pension Rights Center and other women’s and retiree organizations.< Back