September/October 2011

On September 13, 2011, the Department of Labor (DOL) released Technical Release 2011-03 which provides interim
guidance on electronic delivery rules for required participant disclosures. DOL regulations under ERISA §404, which
become effective in 2012, will require plan fiduciaries to provide certain plan, fee and investment information to
participants* at least annually. The technical release only applies to disclosures required under the ERISA section 404
regulations – it does not apply to other DOL required participant notices (e.g., Qualified Default Investment Alternative (QDIA) notices, etc.)

Background

New Guidance

In the technical release the DOL confirmed that quarterly disclosures required under the participant disclosure
regulation may be provided in the same manner that participant statements are permitted to be provided under FAB 2006-03. DOL also made clear that the current DOL electronic delivery regulation under section 2520.104b-1(c)
may be used when providing the initial and annual disclosures (including the investment comparison chart) under the new participant disclosure regulation.

Alternative Electronic Delivery Rule

The technical release provides for an alternative to following the current DOL electronic regulation when providing
the initial and annual disclosure under the participant regulation. This alternative rule allows the disclosure to be
given using electronic media if a number of conditions are met. Those conditions include:

1. Participants must voluntarily provide an email address to the plan sponsor or plan administrator. It may
   not be a condition of employment to provide the email address; however, if the participant is required to
   provide an email address to access a secure website housing the required disclosure that will be considered
   voluntary.
2. When participants are asked to provide the email address, they must receive the initial notice at the same
   time, along with a statement explaining that providing the email address is voluntary and that they may
   request a paper copy of the information or opt out of receiving the information electronically and how to
   do so. Participants must also be given a description of the participant disclosure information that will be
   provided electronically, how it can be accessed, and an explanation of procedures for updating their email
   address. This notice must be given using the same medium as the request for the email address itself.
3. Participants must also receive an annual notice in the same manner and with the information noted above.
   This notice must be furnished on paper unless there is evidence that the participant interacted electronically
   with the plan after the date the first notice was sent.

The release provides a special transition rule for participants whose email addresses are already on file. This group of
participants must receive the information noted above at least 30 days but no earlier than 90 days prior to the date
the initial disclosure is provided under the ERISA section 404 participant disclosure regulation. However, this transition rule is not available, and a paper notice must be furnished, unless there is evidence that the email address was used by the participant for plan purposes during the preceding 12-month period.

Next Steps

As noted, the DOL reiterated that current electronic delivery rules may be followed when providing the ERISA §404
participant disclosure information. Plan sponsors will need to evaluate whether use of the alternative rule is something they wish to pursue. As this is an interim rule, we will keep you informed of any additional guidance on this subject.

*Note, the term participants also refers to beneficiaries and alternate payees with rights under the retirement plan.

See earlier information on this topic in our July edition of Retirement News.

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