DOL Sends Electronic Disclosure Rule to OMB
The proposed rule, which the OMB has up to 60 days to review is aimed at reducing costs and improving participant understanding of retirement plan disclosures.
On August 16, the Office of Management and Budget (OMB) received from the Department of Labor (DOL) a proposed rule relating to the providing of electronic disclosures to retirement plan participants.
The title of the rule is “Improving Effectiveness of and Reducing the Cost of Furnishing Required Notices and Disclosures.” According to the DOL, it is aimed at reducing the costs and burdens imposed on employers and other plan fiduciaries responsible for the production and distribution of retirement plan disclosures required under Title I of the Employee Retirement Income Security Act (ERISA), as well as making these disclosures more understandable and useful for participants and beneficiaries. It is being proposed in response to Executive Order 13847, Strengthening Retirement Security in America.
A study last year from the American Retirement Association (ARA) commissioned with the Investment Company Institute (ICI) found that eliminating the cost of delivering paper notices to 80 million participants annually can translate into additional retirement savings of about 2.4% over a lifetime of work. The study also concluded that e-delivery improves access for the visually impaired and others with disabilities and improves access and the quality of information for those who speak English as a second language.
In June, eight organizations associated with defined contribution (DC) plans submitted a letter to the DOL’s Employee Benefits Security Administration asking it to propose regulations that would permit plan sponsors to make electronic delivery the default method of delivery for retirement plan disclosures and notices. If employees did not want electronic delivery, they would have the ability to request paper copies.
The OMB has up to 60 days to review and act on the submission—but could act more quickly—after which the DOL would propose the rule in the Federal Register and provide a 60-day comment period for stakeholders. In its spring regulatory agenda, the agency indicated it planned to issue a Notice of Proposed Rulemaking (NPRM) on electronic delivery of disclosures in December of this year.