For more stories like this, sign up for the PLANADVISERdash daily newsletter.
Compliance November 5, 2013
GAO Seeks Clarity on Electronic Disclosure Rules
The Government Accountability Office (GAO) asked the U.S. Treasury and Department of Labor (DOL) to revise electronic disclosure rules governing employee-sponsored retirement plans to improve clarity and protect participant rights.
Reported by John Manganaro
The move comes after the DOL’s 2011 request to the GAO for more research on trends in electronic disclosure within qualified retirement plans. Now, two years later, the GAO released a 46-page report on the subject examining the extent to which law and regulation permits electronic disclosures, as well as the impact of advantages and disadvantages presented by the growing practice.
In short, the GAO found federal statutes and regulations under the purview of the DOL and the Department of the Treasury do, in fact, allow employers who sponsor private retirement plans to furnish all related disclosures to participants electronically—but only so long as affirmative consent is attained in advance and participants meet certain Web accessibility requirements.
When neither of these conditions can be met, or when requested by participants, plan sponsors must send paper disclosures.
Industry representatives and participant advocates reported various advantages and disadvantages concerning the use of electronic delivery to the GAO. Both groups agreed that the popularity of electronic delivery continues to grow in the face of new technology efficiencies—such as reduced costs and better digital tracking of disclosures—that can be advantageous to both plan sponsors and participants.
However, both groups also raised concerns with the requirements associated with electronic delivery, citing issues with lack of consistency and clarity as well as concerns that current regulations may not adequately protect a participant’s right to opt to receive paper disclosures.
The GAO’s analysis of these concerns identified multiple weaknesses in the current electronic delivery requirements prescribed by the DOL and the Treasury, according to the report. For example, although participants may request paper disclosures at any time, requirements permitting default electronic delivery and sponsors’ use of a secured website to furnish disclosures may not fully protect a participant’s ability to choose paper as their preferred delivery method on an ongoing, rather than a document-by-document, basis.
A full copy of the GAO report is available here.