This episode is a great example of how fast technology is changing, and how that affects 401(k) plans. We’ve selected audio clips from a recent Qualified Plan educational webinar that Josh hosted with Matthew Eickman, the National Retirement Practice Leader for Prime Capital Investment Advisors & Qualified Plan Advisors. In this episode, Josh and Jay provide context to Electronic Disclosure Rule content provided by Matthew, particularly around how significantly technology and electronic communications have changed since the rule was first introduced in 2002. This episode also details the most important tasks that plan sponsors need to take NOW with the Electronic Disclosure Rule, such as starting with building an email list within the provided structure. If you’re a plan sponsor or 401(k) plan decision maker, take a few minutes to hear practical explanations and guidance to this new rule!
Josh is connected to Prime Capital Investment Advisors and Qualified Plan Advisors. His company, Gulf Coast Financial Advisors, is part of their network of independent advisors, which gives him the support of a multi-billion dollar investment company but still provides for independence and ownership of his practice.
- The new electronic disclosure rule recognizes the widespread modern-day reliance on electronic communication. Practically, it provides employers the flexibility to more widely disclose retirement plan information in an electronic format. It does so in the form of a voluntary "safe harbor" for employers that would like to use electronic disclosure as a default approach for ERISA-required (but not Tax Code-required) participant communications.
- The final regulation provides for two options: posting the disclosure(s) on a website or email delivery.
- From a practical perspective, the new safe harbor provision is available immediately. The formal effective date is 60 days after the final publication of the regulation, but the Department of Labor explicitly provided its support for employers to implement the rule earlier.
- But this doesn’t mean you can start to use electronic disclosure immediately. The regulation requires a specific written notice before an employer can begin to rely on electronic disclosure. The DOL considers the rule to follow a "notice-and-access" structure, with the initial written notice being the first step within the structure.
- If you’re already using electronic disclosure for some or all of you people, the new rule does not immediately replace the DOL guidance currently on the books. Some of the DOL's prior guidance will be phased out over an 18- month period, but that won't happen immediately.
- Electronic Disclosure Rule action items to tackle NOW:
- Build an email list that can be employer assigned or employee-provided.
- If you plan to use some employee-provided email addresses, the regulation provides ample flexibility around the time at which you receive that address. The emails may be provided as part of the job application and hiring process, or as a part of becoming a plan participant, "or otherwise" (as the regulation broadly provides).
- Distribute the paper notice. The regulation requires that this paper notice include specific information, including the email address for the specific individual.
- Begin to use the electronic disclosure structure that became effective on 7/27/20. You will want to build out a process to maintain the email list that tracks email addresses for future hires, individuals who have opted out of the electronic disclosures and email addresses for a terminated employees (in the case where the email address on file was employer-assigned).
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If any of these topics apply to your situation, we can help! Reach out to us at 251-327-2124, or email firstname.lastname@example.org.