Electronic Communications — Part Two
Rev. 08/04/05, E-mail Alert 2005-15


The DOL issued final rules on electronic delivery (specifically, the delivery of ERISA-required participant disclosures such as SPDs) in 2002. This article compares the ERISA electronic rules with the newly proposed IRS rules.

The DOL issued its final rules on electronic delivery of participant communications (specifically, the delivery of ERISA-required participant disclosures such as SPDs) in 2002 (linked for reference below). The DOL rules have not changed. For clarification purposes and to complete the picture of E-SIGN electronic communication for retirement plans, as implemented by the two major regulators of retirement plans, the IRS and the DOL, we are reprinting our earlier analysis of the DOL rules.

In the following article that appeared in our June-July 2002 Prototype Plan News Newsletter, we discuss the DOL final rules for the use of electronic communication and recordkeeping technologies by employee benefit and welfare benefit plans. One of the major difference- between the IRS and DOL approaches is the scope of their respective releases. The IRS chiefly deals with income tax notices related to distributions and related participant elections, whereas the DOL material deals with ERISA disclosure and reporting matters, such as disclosures to participants. There is, of course, some overlap between the agencies, such as the ERISA 204(h) notice. The DOL also provide rules applicable to recordkeeping technologies.

June-July 2002 Prototype Plan Newsletter Article – DOL Electronic Disclosures

DOL FINALIZES REGULATIONS ON THE USE OF ELECTRONIC DISCLOSURES
On April 9, 2002 the Department of Labor released final regulations on the use of electronic media to provide qualified plan disclosures materials, such as Summary Plan Descriptions (SPDs), Summary of Material Modifications (SMMs), Summary Annual Reports (SARs), and all other notices required under Title I of ERISA. This regulation also discusses the requirements for record retention of electronic media.

In order to use electronic media to distribute plan-related materials, the plan administrator must:

1. insure that the participants actually receive the transmitted information by either the use of a return-receipt electronic mail feature or by periodic surveys designed to confirm the integrity of the mail delivery system.
   
2. prepare the electronic disclosures in a manner consistent with the style, format and content of the written documents;
3. notify each plan participant, including retirees and terminated employees with vested benefits as well as beneficiaries electronically or in writing which documents are provided electronically; and
   
4. provide participants and beneficiaries the right to receive paper copies of each document free of charge.

The final regulations also addressed certain record retention requirements. In general, ERISA requires that those parties who are required to provide reports or disclosures must retain records of such reports. In addition, the employer must maintain records for each participant sufficient to determine the benefits due or that may become due and payable to that participant. The regulations provide that electronic media may be used for the storage of records provided that:

1. the recordkeeping system has controls to ensure the integrity, accuracy, authenticity and reliability of the data;
   
2. the electronic records are maintained in reasonable order, in a safe and accessible place and in such a manner that they may be readily inspected or examined;
   
3. the electronic records may be converted readily to paper form; and
   
4. adequate record management practices are established such as off-site storage or back-up copies

The regulation also emphasizes that the plan administrator’s (the employer’s) obligation to maintain records cannot be avoided or delegated by contract to or use of a third party recordkeeping system.

These regulations are effective for the first plan year beginning after October 9, 2002.

For the DOL Final Rules of April 9, 2002: click here.

Final Regs. Electronic Notices, Consents, Elections

Electronic Communications-Part One

Bill Grossman, QPA