401(k) Plan Delivery Methods

Paper Deliver of Materials

The following paper delivery methods are specified by the DOL as consistent with the general requirement that materials be furnished by a method that is reasonably calculated to ensure actual receipt.

1. U.S. Mail

• First Class Mail
• Second and Third Class Mail, provided that:
  • return and forwarding postage is guaranteed
  • address correction is requested
  • any material which is returned with an address correction shall be sent again by first-class mail or personally delivered to the participant at his or her work site.

2. Intra-Office Mail or Inserts

Materials may be provided as a special insert to a company publication provided that:

• The mailing list is complete and up-to-date
• There is a notice displayed on the cover of the publication that the ERISA materials are inside
• Steps are taken to ensure delivery to anyone who does not receive the publication

3. Hand Delivery

Although specified as a safe harbor delivery method, the regulations do not specify what constitutes hand delivery. If an employer hand delivers material, it should be prepared to prove delivery, which may consist of:

• An established policy requiring hand delivery of materials
• Communication of this policy to responsible employees
• Consistent records demonstrating that delivery was made

Simply placing the material in a location that is frequented by eligible participants is NOT an acceptable method.

Electronic Delivery of Materials

The DOL has established new rules under ERISA concerning the distribution of various disclosures required by ERISA to employees and participants in retirement plans, including 401(k) plans, as well as to retirement plan beneficiaries outside of the work place. These rules establish various safe harbors for both electronic and paper distribution of materials. DOL regulations allow plan administrations to electronically send all retirement plan disclosures required under Title I of ERISA.

• A paper version of the disclosure must always be provided upon request
• Documents delivered electronically must be furnished in a manner consistent with the applicable style, format, and content requirements required by ERISA. However, the DOL has indicated that the appearance of paper and electronic versions need not be identical.

E-Delivery Safe Harbor Under Final DOL Regulations

Although electronic disclosures have generally been permissible since 2002, Final DOL Regulations issued on May 21, 2020, established a safe harbor that permits 401(k) to use electronic methods as the default (i.e., regular) means of disseminating most required notices and disclosures required for retirement plans under Title I of ERISA.

The Final DOL Regulations allow 401(k) plan administrators to electronically send all disclosures required under Title I of ERISA for retirement plans as the default means of distribution, provided certain requirements, including measures meant to protect participant rights, are met. Importantly, recipients always have the right to opt out of electronic delivery if they prefer to receive paper notices.

Summary of Conditions for Meeting Safe Harbor

Generally stated, there are two ways in which a 401(k) plan sponsor may meet the new default electronic delivery safe harbor – either through posting covered documents to an internet website devoted to that purpose, or by direct e-mailing of covered documents to covered individuals.

For this purpose, a “covered individual” is:

• A participant, beneficiary, or other individual entitled to covered documents
• Who provides the employer, plan sponsor, or plan administrator (or designee of any of the foregoing) with an electronic address –
  • This can be an e-mail address or an internet-connected mobile-computing-device (e.g., smartphone) number.

Conditions for Safe Harbor Method I – Use of Internet Website for Posting Covered Documents

Generally stated, the safe harbor method for internet websites is satisfied if the following conditions are met:

• Each covered individual must receive a “notice of internet availability” (see below) when each “covered document” (i.e., any retirement plan document required to be disclosed by Title I of ERISA) is posted to the plan internet website dedicated for this purpose.
• The “notice of internet availability” must contain the following information:
  • A prominent statement (a title, legend, or subject line) that reads: “Disclosure About Your Retirement Plan”
  • A statement that reads: “Important information about your retirement plan is now available. Please review this information”
  • The name and a brief description of the covered document
  • The internet website address, or a link to such address, where the covered document is available
  • A statement of the right to request a paper version of the covered document, free of charge, and an explanation of how to exercise this right
  • A statement of the right, free of charge, to opt out of electronic delivery and receive only paper versions of covered documents, and an explanation of how to exercise this right
  • A statement that the covered document is generally not required to be available on the website for longer than one year
  • The telephone number of the plan administrator or designated plan representative
• The notice of internet availability must be sent to the electronic address previously provided by the recipient (usually, an e-mail address or smartphone number).
• The notice generally must be sent each time a retirement plan disclosure is posted to the internet website.
• The notice generally must be furnished separately from other documents or disclosures.
• The notice must be written in a manner calculated to be understood by the average plan participant.

Standards for Internet Websites

The Final DOL Regulations establish the following standards for internet websites:

• All covered documents must be available on the website by no later than the date on which they are required to be furnished under Title I of ERISA.
• Covered documents must remain on an internet website until superseded by a subsequent version, but in no event for less than one year.
• Covered documents must be presented on the website in a manner calculated to be understood by the average plan participant.
• Covered documents must be presented on the website in a widely available format suitable for both reading online and printing clearly on paper.
• Covered documents must be searchable electronically by numbers, letters, or words.
• Covered documents must be presented on the website in a format that allows them to be permanently retained electronically.
• The plan administrator must take reasonable measures to ensure that the website protects the confidentiality of personal information relating to any covered individual.

Participants’ Right to Paper Copies or to Opt-Out of Electronic Delivery

Under the Final DOL Regulations, 401(k) plan administrators must maintain reasonable procedures to ensure that covered individuals retain the rights to:

• Have the plan administrator, upon request without charge, provide no more than one paper copy of a covered document.
• Globally opt out electronically delivery and receive only paper verisions of covered documents.

Conditions for Safe Harbor Method II – Direct E-Mailing of Covered Documents

The Final DOL Regulations provide that, as an alternative to posting covered documents on a dedicated plan website, a plan administrator may elect to satisfy the ERISA participant disclosure retirements by directly furnishing a covered document to a covered individual by sending it to a previously provided e-mail address, assuming the following conditions are met:

• The covered document is sent to a covered individual’s previously provided e-mail address by no later than the date on which it is required to be furnished under ERISA
• In place of a “notice of internet availability” (see above), the plan administrator sends an e-mail to the covered individual that:
  • Includes the covered document in the body of the e-mail, or as an attachment
  • Includes a subject line that reads: “Disclosure About Your Retirement Plan”
  • Includes the following:
    • A brief description of the covered document
    • A statement of right to receive a paper copy of covered document
    • A statement of right to opt out of electronic delivery
    • A telephone number to call for help with these items
  • Is written in a manner calculated to be understood by the average plan participant
• The coved document itself must be:
  • Written in a manner calculated to be understood by the average plan participant
  • Presented in a widely available format suitable to be read online, printed clearly on paper, and permanently retained in an electronic format
  • Searchable electronically by numbers, letters, or words
• The plan administrator or service provider must take measures reasonably calculated to ensure the confidentiality of personal information relating to any covered individual.
• The recipient has all of the same rights relating to requests for paper documents and the right to globally opt out of electronic delivery as under the use of internet website posting safe harbor method (see above)

Conditions Applicable to Both Safe Harbor Methods

Safeguard Designed to Detect Invalid or Inoperable E-mail Address

Plans must have a system designed to alert the plan administrator or service provider of a covered individual’s invalid or inoperable electronic address. If an e-mail address is identified as invalid or inoperable, then the plan must promptly take reasonable steps to cure the problem, such as resending the covered document to any secondary email address on file.

Special Procedures Upon Separation from Employment

When an employee leaves his or her job, 401(k) plan administrators must take active steps to ensure the continued accuracy of the electronic address on file at the time of separation, to ensure continued access of either the notice of internet availability or the covered documents themselves, as applicable.

Previous Electronic Distribution Safe Harbor

Electronic Delivery Methods  The following electronic delivery methods are specified by the DOL as consistent with the general requirement that materials be furnished by a method that is reasonably calculated to ensure actual receipt.

• Email
• Attachment to email
• Posting documents to a company web site
• Provision of documents on magnetic disk, CD-ROM, or DVD

To comply with this safe harbor, the employer must:

• Take appropriate steps to ensure that the system for furnishing electronic documents results in actual receipt of the transmitted information (e.g., using return-receipt or notice of undelivered electronic mail features, or conducting periodic reviews or surveys to confirm receipt of the transmitted information);
• Provide notice to each recipient at the time the electronic documents are furnished regarding the significance of the document (e.g., when documents are delivered via email, the recipients should be able to distinguish them from all other items in their inbox, or if the documents are newly posted to an intranet site, the intended recipients must be alerted to the fact that they are now available);
• The regulations specifically note that merely making documents available in a location frequented by participants, such as at a computer kiosk located in a workplace, does not sufficiently ensure actual receipt, even if the participants are notified that the documents may be obtained at that location; and
• If the document includes protected health information (e.g., the electronic delivery of benefit explanations or claims information), the employer must take steps to assure compliance with HIPAA and other applicable laws governing the privacy and security of such information.

Participant Consent  Depending on the situations, electronic delivery may require prior consent from the participant.

Without Prior Consent

• Participant has the ability to effectively access documents furnished in electronic form at any location where the participant is reasonably expected to perform his or her duties as an employee; and
• Participant’s access to the employer’s electronic information system is an integral part of those duties.

With Prior Consent 

Consent must include the following information:

• The types of documents to which the consent would apply;
• That the consent can be withdrawn at any time without charge;
• The procedures for withdrawing consent and for updating the participant’s, beneficiary’s or other individual’s address for receipt of electronically furnished documents or other information;
• The right to request and obtain a paper version of an electronically furnished document, including whether the paper version will be provided free of charge; and
• Any hardware and software requirements for accessing and retaining the documents.

Home Office Employees  Employees working out of a home office will fall under this provision provided that they meet the requirements above and that the home office is a location where the employment duties could be reasonably performed and that access to the employer’s computer system is an integral part of the employee’s duties. If the employees meet the criteria above, they DO NOT have to:

• Have the ability to print out a paper copy at the place where they have computer access
• Consent to receive documents electronically

No Computer Access  Employees/Individuals without work related computer access may affirmatively consent to the electronic delivery of materials.  The consent must include the same information outlined above.  Note: The plan administrator is generally not required to distribute SPDs, SMMs, or SARs to each beneficiary under the plan. Therefore, the plan administrator is not required to obtain consent from each beneficiary under the plan (e.g. spouses and dependents).

If delivery is through the Internet or other electronic communication system, the individual must affirmatively consent in a manner that reasonably demonstrates the individual’s ability to access information in the electronic format that will be used. Requiring that the consents be furnished back to the employer electronically is a reasonable demonstration of the individual’s access ability. 

An individual must provide an electronic address for delivery of documents.

FAQs

Can benefit and claim determinations be provided electronically? 

Yes. The regulations allow that benefit and claims determinations related to a specific individual may be communicated electronically to that individual.  However, if the information contained within the communication is confidential in nature, the plan administrator must take appropriate and necessary steps to ensure that the information remains confidential.  The regulations do not provide any guidance on what measures must be used to protect the confidentiality of this information.

What forms of electronic disclosure are permissible?

The regulations do not require the use of any specific form of electronic media.  Examples of permissible forms of electronic disclosure include delivery of documents by email, attachment to an email, posting documents on a company Web site, or on CD-ROM or DVD.

May a plan administrator electronically deliver ERISA notices by placing the information on a company Web site?

Not by itself.  The plan administrator must also send a notice, either electronically or in paper form, that notifies the employee that the SPD is available on the Web site.

Click here for a printable summary of the electronic delivery rules.

The paper and electronic distribution methods described above are not intended to be exclusive and employers may use other distribution methods. Whatever method is used, employers should be prepared to prove in individual cases that information was provided.

Additional Resources

Reporting and Disclosure Guide for Employee Benefit Plans

Federal Register: Rules Relating to Use of Electronic Communication