Right on schedule, the Department of Labor (DOL) has sent a proposed rule for electronic disclosures to retirement plan participants to the White House’s Office of Management and Budget.
The proposal, “Improving Effectiveness of and Reducing the Cost of Furnishing Required Notices and Disclosures,” comes in response to President Trump’s 2018 Labor Day weekend executive order, “Strengthening Retirement Security in America.”
That order directed the DOL 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”.
The current retirement plan disclosure rules were set in the mid-1980s, well before the widespread availability of wireless internet, much less the “smart” phones that have become ubiquitous.
The proposal, noted as “economically significant,” was received at the OMB for review on August 16. 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 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.
OMB typically takes 30 days or less to review a proposal — it was delivered to OMB on August 16.
Delegates at the seventh annual NAPA D.C. Fly-in Forum were told July 23 by a senior DOLofficial to keep an eye out for proposed guidance addressing electronic disclosure of retirement plan information. Jeanne Wilson, Principal Deputy Assistant Secretary with the DOL’s Employee Benefits Security Administration (EBSA), said the agency would soon be issuing a proposal that follows up on President Trump’s 2018 Executive Order directing the agency to improve the effectiveness of and reduce the cost of retirement plan disclosures.
One presumes the proposal was delivered…electronically.
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