E-Delivery Final Rule at OMB

At a time when much of the nation is working remotely, the Labor Department’s final rule on electronic disclosures has been delivered to the White House’s Office of Management and Budget for review.

“We are going to be pushing to get this finalized as soon as possible under the circumstances,” noted Brian Graff, CEO of the American Retirement Association. “Most recordkeepers and TPAs can’t even get in to their offices to print notices, like first quarter benefit statements. This regulation is needed now more than ever.”

The proposed rule was delivered to OMB last August and released by the Department of Labor in October 2019. The proposal, “Improving Effectiveness of and Reducing the Cost of Furnishing Required Notices and Disclosures,” came in response to President Trump’s 2018 Labor Day weekend Executive Order, “Strengthening Retirement Security in America.” 

That order directed the Labor Department to “explore ways to reduce 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 ERISA, as well as “ways to make these disclosures more understandable and useful for participants and beneficiaries.” Stakeholders submitted more than 250 public comments to the agency on the proposal.

The current rules for delivery of retirement plan disclosures were established more than a decade ago (2004).

The final review of the proposal, noted as “economically significant,” was received at the OMB for review on April 16; while there is no fixed timeline, OMB typically takes 30 days or less to review a proposal. 

A report commissioned by the American Retirement Association and the Investment Company Institute in 2018 estimated that participants could save more than $500 million per year, assuming about eight participant mailings per year across more than 80 million 401(k) account holders. By contrast, once an electronic notice is drafted, the incremental cost of an email to one person is essentially zero, the study notes. And as discussed in the 2011 study, there are also enormous environmental benefits to e-delivery from the reduction of tons of discarded paper every year. A 2015 report prepared for the SPARK Institute offers similar findings, with estimated annual savings of shifting to e-delivery for retirement plan notices in the range of $300 million to $750 million per year.

One presumes the proposal was delivered… electronically.