The Department of Labor (DOL) recently proposed narrow amendments to two separate safe harbor regulations issued in 2002 and 2020 that allow ERISA-required disclosures to be delivered electronically rather than on paper. The proposed amendments aim to implement the congressional directives that accompanied Section 338 of the SECURE 2.0 Act of 2022. Section 338 amended ERISA to require that at least one benefit statement that is furnished annually for a defined contribution (DC) plan and one benefit statement that is furnished at least once every three years for a defined benefit (DB) plan be on paper (with certain exceptions). The proposal does not provide any interpretive guidance on the actual “paper statement” statutory requirement.
As background, the 2002 safe harbor allows e-delivery of participant disclosures as the default method of delivery for current employees if access to the employer’s electronic information system is an integral part of their job duties. This group is sometimes referred to as being “wired at work.” Participants, beneficiaries and other individuals who do not fit into the “wired at work” category must affirmatively consent to receive documents electronically (the “Affirmative Consent” safe harbor).
The 2020 safe harbor established two additional safe harbors that administrators can use to electronically distribute required disclosures to retirement plan participants (note, before using either method, plans must provide an initial paper notice informing individuals that they will begin receiving electronic disclosures and may opt out without cost):
- The first is a "Notice and Access" safe harbor where participants are notified that information is available on a website
- The second is a "Direct Email" safe harbor that allows for certain documents to be emailed directly to individuals
In 2022, Section 338 of SECURE 2.0 amended the requirements around paper delivery of benefit statements and directed the DOL to update the 2002 and 2020 safe harbors to reflect those changes (discussed below).
Proposed changes to 2002 safe harbor regulation
Section 338 directs the DOL to update the 2002 electronic disclosure safe harbor for plans that will use that safe harbor to furnish a pension benefit statement electronically that is otherwise required to be furnished on paper. Specifically — for participants who first become eligible to participate and beneficiaries who first become eligible for benefits after December 31, 2025 — plans must send, before any pension benefit statement is e-delivered, a one-time initial paper notice informing recipients of their right to request that all documents required to be disclosed under ERISA be furnished on paper (i.e., a global opt-out).
The proposal would narrowly implement this statutory directive. The one-time initial notice requirement and related global opt-out right covers only those individuals who first become eligible to participate and beneficiaries who first become eligible for benefits after December 31, 2025. In addition, the new initial notice is required only if a plan administrator furnishes the pension benefit statement that is otherwise required to be delivered on paper under Section 338 by e-delivery using the 2002 safe harbor.
The proposal would also clarify that a plan administrator can satisfy the new one-time initial notice requirement by providing the same disclosures that are required under the existing affirmative consent safe harbor by paper delivery.
Proposed changes to 2020 safe harbor regulation
Section 338 also directs the DOL to update the 2020 electronic disclosure safe harbor regulation to ensure the following:
- Participants and beneficiaries have “the opportunity to request that any disclosure required to be delivered on paper…be furnished by electronic delivery.”
The proposal would amend the 2020 safe harbors to require that any participant or beneficiary who receives a pension benefit statement on paper pursuant to Section 338 must have an opportunity to request that all such statements be furnished by e-delivery. Note: Although Section 338 references “any disclosure required to be delivered on paper under applicable [DOL] guidance,” the proposal is limited to paper benefit statements required by Section 338 because that is the only retirement plan document that fits this category (other than the initial notification of default e-delivery and right to opt out under the existing 2020 safe harbor). - Each paper statement furnished by the plan includes “an explanation of how to request that all such statements, and any other document required to be disclosed under [ERISA] be furnished by electronic delivery.”
The proposal would amend the 2020 safe harbors to require that any benefit statement furnished on paper pursuant to Section 338 must contain an explanation of how to request that all such statements be furnished by e-delivery, as well as contact information for the plan sponsor, plan administrator or other designated representative, including a telephone number. Note: Although Section 338 references “any other document required to be disclosed under [ERISA],” the proposal is limited to paper benefit statements required by Section 338 because this provision only applies to plans already furnishing nearly all disclosures electronically using the 2020 safe harbor, so these are the only disclosures these plans are likely providing on paper to individuals who have not opted out of electronic disclosure (other than the initial notification of default e-delivery and right to opt out under the existing 2020 safe harbor). - A plan using the 2020 safe harbor will “not charge any fee to a participant or beneficiary for the delivery of any paper statements.”
The proposal would amend the 2020 safe harbor to provide that plans that use the 2020 safe harbor may not charge any fees for the delivery of paper benefit statements, even if a participant requests multiple paper benefit statements. - Each document furnished by electronic delivery includes “an explanation of how to request that all such documents be furnished on paper in written form.”
The proposal does not implement this fourth directive, because the 2020 safe harbor already gives individuals the right to globally opt out of e-delivery and receive all covered documents in paper form. - “A plan is permitted to furnish a duplicate electronic statement in any case in which the plan furnishes a paper pension benefit statement.”
The proposal does not implement this fifth directive, because nothing in the regulation restricts a plan’s ability to furnish a duplicate statement electronically.
Retirement plan implications
Following are considerations for retirement plans in light of the proposed amendments to the two separate electronic disclosure safe harbor regulations.
Plans that furnish benefit statements using the 2002 safe harbor
Assuming the proposal is finalized without changes, these plans will need to provide employees who first become eligible to participate and beneficiaries who first become eligible for benefits on or after January 1, 2026, a one-time initial notice on paper, before the e-delivery of any pension benefit statement, of their right to request that all documents required to be disclosed by the plan be furnished on paper in written form. This is the case even for employees who meet the wired-at-work standard, despite the fact that wired-at-work employees would not otherwise have a right to opt out of e-delivery under the 2002 safe harbor.
Plans that furnish benefit statements using the 2020 safe harbor
Assuming the proposal is finalized without changes, these plans will need to provide paper pension benefit statements, generally at least once per year in the case of a DC plan and at least once every three years in the case of a DB plan, unless the individual affirmatively opts into receiving electronic statements. Such paper benefit statements must contain an explanation of how to request that all such statements be furnished by e-delivery and contact information for the plan sponsor, plan administrator or other designated representative of the plan. Plans will not be able to charge for any paper pension benefit statements.
DB plan sponsors that provide an alternative notice of availability in lieu of a benefit statement
Under ERISA, instead of complying with the requirement to provide a benefit statement once every three years, DB plan sponsors may provide an annual notice advising participants that benefit statements are available and explaining the procedures for obtaining a statement. It is our understanding that the annual notice of availability approach is outside the scope of the paper benefit statement mandate.
Going forward
Section 338 provides that the new paper benefit statement requirement applies with respect to plan years beginning after December 31, 2025. The effective date for the proposed regulatory changes to the e-delivery safe harbors remains unknown; however, the DOL indicated that, for the period between when the proposed regulations were published and when a final regulation is issued, no enforcement action will take place against plans “that comply in good faith with a reasonable interpretation of the provisions set forth in the proposal.”
As such, sponsors who use the 2002 safe harbor or 2020 safe harbor to provide benefit statements may want to comply with the proposed regulatory changes, assuming the proposal won’t be finalized before the first paper benefit statement is required under Section 338.
Comments on the proposal are due by April 27, 2026.
