The Labor Department has issued a new rule for electronic delivery of plan disclosures to retirement plan participants, called “notice-and-access.” The rule is effective July 27, 2020. The new rule replaces prior guidance on electronic delivery of disclosures to participants, with the exception of a 2002 electronic disclosure rule. The 2002 electronic disclosure rule remains in effect and permits electronic disclosure to employees who work with the employer’s computer system as part of their daily duties and to those participants and beneficiaries who choose to receive disclosures electronically.
Although the notice-and-access rule is effective July 27, 2020, the Labor Department included an 18-month transition period for plans to adjust their procedures to comply with the new rule.
Employers still may send disclosures by paper or follow the 2002 electronic disclosure rule. However, it is expected that many employers will choose this new method for furnishing disclosures to participants.
How Notice-and-Access Works
Plan participants are notified by electronic means, either email or smartphone text, that a document is available for viewing on a website. Participants must then go to that website and find the named document to view the disclosure. Thus, rather than automatically being sent paper copies of disclosures in the mail, workers and retirees will now receive an electronic communication that they must go and find the disclosure on a website. The email or text must tell them that they can request a free paper copy, which should be provided “promptly.”
In more detail
Covered individuals and covered documents
The initial paper notice must also include a statement of the specific electronic address that the plan will use to send the notices to the participant, plus any instructions for steps that will be necessary to access documents, such as creating passwords, downloading a mobile application or setting up an online account. A contact phone number is not required in the initial notice.
Notice of Internet Availability (NOIA)
The NOIA may, but is not required to, include a statement saying whether any action is needed by the participant in response to the information provided in the posted document.
The plan administrator is not required to monitor delivery of the NOIA to ensure that the notice is opened and read, nor to ensure that a participant actually accessed the disclosure on the website. The only requirement is that the system be designed to alert the plan administrator when an email or text message has bounced back as undeliverable. If an electronic address is inoperable, the administrator must take reasonable steps to get a working electronic address. If the administrator cannot obtain a valid electronic address for a participant, the administrator must send paper copies of documents as if the individual had chosen to opt out of electronic delivery.
Notices that can be combined
Four categories of documents can be combined in one NOIA. These are:
(1) The Summary Plan Description (SPD).
(2) Required annual notices that do not require action, including the Summary Annual Report (SAR), annual funding notices, Qualified Default Investment Alternative (QDIA) notice, annual pension benefit statement (but not the 401(k) quarterly statements), annual investment-related information such as the investment chart, general plan information and descriptions of fees. (Note: Quarterly benefit statements for 401(k) plans cannot be combined with other documents. Each quarterly pension benefit statement must have a separate notice of internet availability.)
(3) Any other “covered document” if authorized in writing by the Secretary of Labor.
(4) IRS notices if authorized in writing by the Treasury Secretary.
The notice of internet availability must include a statement of the right to free paper copies. When disclosures are combined, individuals may choose which of the disclosures they want on paper.
Rights to Paper
Following the initial paper notice of the rights to paper, all other mentions of rights to paper will be delivered electronically as part of the notice of internet availability (NOIA). Plan administrators must have “reasonable procedures” for individuals choosing paper that do not “unduly inhibit” processing a request for paper. The NOIA must include a phone number for contacting the plan administrator or plan representative.
Only one paper copy of a document must be furnished free of charge. It is up to the plan whether to charge for additional copies. Additionally, individuals requesting to opt out of electronic delivery cannot be charged a fee.
Plans are not required to let individuals who opt out of electronic delivery pick and choose which documents they want on paper and which will be delivered electronically. A global opt-out is total. After a participant opts out, a plan may permit individuals to choose some paper and some electronic. It is up to the plan whether an individual can choose which disclosures to receive by paper. Also, plans may choose to give access to the website to individuals who opt out, but this is not required.
The plan administrator is responsible for establishing and maintaining the website and for having “reasonable procedures” for compliance by service providers.
The Pension Rights Center submitted comments to the Labor Department on the proposed notice-and-access rule. In the comments we expressed our concerns that the rule will harm many participants who may fail to receive important plan information and who may not be able to retain the information they need to understand their rights to plan benefits and to later apply for those benefits.
See also The Pension Rights Center’s
 Default Electronic Disclosure by Employee Pension Benefit Plans Under ERISA, RIN 1210-AB90, 85 Fed. Reg. 31884 (Final Rule, May 27, 2020).
 See 29 CFR Sec. 2520.104b-31.
 Prior guidance includes Field Assistance Bulletin (FAB) 2006-03, FAB 2008-03, Technical Release 2011-03R (TR 2011-03R).
 See paragraph (b) of the rule for a definition of covered individiuals.
 See paragraph (c) of the rule for a definition of covered documents. Documents available only by request include the complete plan document, collective bargaining agreement, and Form 5500 annual financial report.
 See paragraph (g) of the rule for initial notice requirements.
 See paragraph (d) of the rule for information on the notice of internet availability.
 See paragraph (i) of the rule for information on combining notices.
 See paragraph (f) of the rule for a description of the right to paper copies.
 In the preamble to the rule, the Labor Department states “plan administrators may offer additional opt-out election options, such as a document-by-document opt-out or one based on categories or classifications of covered documents. For example, some participants might be comfortable knowing that certain documents, such as the SPD, are available on the website, but prefer to receive paper versions of other documents, such as their quarterly pension benefit statements.” Also,”(O)nce a plan respects the individual’s election (to opt out) and satisfies its obligation to furnish paper documents, the plan may continue to provide online access to covered documents that are available as well. The safe harbor has no effect on optional action in this context by plan administrators.” 85 Fed. Reg. 31899, May 27, 2020.
 See paragraph (e) of the rule for a discussion of the website standard.
 See paragraph (k) of the rule for a description of direct delivery.
 See paragraph (h) for a discussion of severance from employment.