Peter Gulia

ESOP Guy, I read the rule as allowing an electronic notice, subject to the other conditions, if the integral-part condition is met or the affirmative consent was made (and has not been withdrawn). I read the rule as an "or", not as requiring both of those conditions. David Rigby, an employer/administrator should use technological means to show that the notices were delivered. In my experience, if the employer really requires its employee to use e-mail as a part of his or her job, bad addresses can be readily detected and corrected. (If an error in addressing a current employee goes unobserved, how "integral" to the work is the regular use of the e-mail system?) And many employers use, for other business reasons, a system of surveillance on employee's use of the employer's e-mail system. My 2 cents, I too find that many employers and service providers are struggling with the trade-off of a today expense to build the programming and systems to get a tomorrow expense savings. Also, a service provider might have little incentive to build something to manage an expense that's external to the service provider. Thank you, everyone, for helping me think.

leveena, My 2 cents, and RatherBeGolfing, thank you for the helpful thoughts. So let's try some examples: Imagine a hotel operator requires a cleaner to begin each daily shift by checking electronic communications. Or imagine a delivery-service operator requires a driver to begin each half-day shift by checking electronic communications. If this is enough part of the job's requirements that it's "integral", an employer/administrator may, without a participant's consent, deliver notices by electronic communication (preserving a participant's right to request paper documents). If this is legally sufficient, why are so many employer/administrators still sending paper notices?

A fiduciary may use e-mail as the initial means of delivering a communication to a participant who can “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” if “access to the employer’s … electronic information system is an integral part of those duties[.]” 29 C.F.R. § 2520.104b-1©. But what does it mean to say that using e-mail or some other software is “integral” to an employee’s work? If a person’s work involves physical activities but his or her employer requires him or her to check e-mail every two hours to get instructions, is that enough? Is the answer the same or different if the employee is required to check e-mail only once for a whole eight-hours shift? If a worker is required to read e-mail but is not expected to write any response, is electronic communication "integral" to his or her work?

Sorry if I confused anyone. I didn't read all the facts carefully enough, and missed that the employer maintains a group health plan beyond the reimbursement arrangement.

Without otherwise commenting on the wisdom of the described plan design, the employer and its employee-benefits lawyer should read section 18001 [pages 306-312] of the 21st Century Cures Act.

Thanks, David Rigby, Lou S., and ESOP Guy for the further information. Lou S., a BenefitsLink thread earlier this year explained that some administrators do not code a 1099-R concerning disability if the administrator's decision that the distributee was entitled to the distribution did not require the administrator to decide whether the participant was disabled (usually because a distribution was entitled on any severance-from-employment). This leaves processing about whether an early-distribution tax applies or doesn't between the taxpayer and the Internal Revenue Service. What experiences have BenefitsLink readers observed about this?

David Rigby, thank you for the excellent help. rocknrolls2, yes that might be a useful efficiency. But many employers don't have a disability plan. Another query for the BenefitsLink mavens: Is it feasible to design an individual-account retirement plan so there is no benefit that turns on whether a participant is disabled?

Quickly following the recent publication of the Labor department's rule on an ERISA-governed plan's claims procedure concerning a disability benefit, some practitioners suggest that an employer design an individual-account (defined-contribution) retirement plan, if any benefit is provided because a participant is disabled, to refer to the Social Security Administration's decision on whether a person is disabled. Leaving aside questions about an alien who is authorized to work in the United States, is there any circumstance that would make a citizen ineligible for a Social Security benefit so there could be no SSA decision to refer to?

A treaty between the United States and another nation might include provisions that could result in some kinds of plans being treated as analogous to a U.S. qualified retirement plan for some rollover purposes. (I don't know what the U.S.-Mexico treaty provides.) Your client's plan administrator might want its lawyer's advice about whether and how to consider and interpret such a source of law if a participant's request to make a rollover contribution raises the point.

Bill Presson's suggestion about avoiding compensation (and selecting investments not priced to provide compensation) can help. Beyond concerns about ERISA and the Internal Revenue Code, an investment adviser should get its lawyer's advice about how serving in a fiduciary role regarding a retirement plan, even a plan for the adviser's employees and even without compensation, can affect investment-adviser compliance. Just to pick one example, providing investment advice (even without compensation) to a participant arguably might result in "custody" (as defined under investment-adviser law), which would require a Form ADV disclosure, and result in a higher risk profile with securities regulators. See Question XII.1 https://www.sec.gov/divisions/investment/custody_faq_030510.htm (I'm not saying this Q&A is a correct interpretation of the law; rather, I suggest only that it illustrates some of the difficult issues involved, and securities' regulators' incomplete knowledge, concerning an investment adviser's role regarding a retirement plan for the adviser's employees.) There are ways to work with the arrangements to avoid this and other problems.

An employer maintains an individually-designed plan. This plan is in cycle A. The plan received favorable determinations for the previous intervals of the cycle. The employer will not apply for the IRS's determination this winter. For whatever could be the subject of a remedial amendment, what is the last day for the amendment to be executed? Is it January 31, 2017? Or is it (assuming all relevant tax and plan years are calendar year) December 31, 2016?

Kevin C and My 2 cents, thank you for your good help. As I understand the usual seven-day-yield illustration, it assumes the recent seven days' income will continue for a year. Just to pick one example, Fidelity's website displays the seven-day yield for "Fidelity Investments Money Market - Money Market Portfolio - Class I" as 0.77% (counting fee waivers) or 0.73% "without reductions". The same website display shows the shares' one-year past performance as 0.43%. Any more views about whether information furnished to directing participant should include or omit a money-market fund's seven-day yield?

If you're assembling a plan's rule 404a-5 disclosure to participants ... Do you include or omit a money-market fund's seven-day yield? If you include it, what is your reasoning for showing it? (I assume there is no one inarguably right or wrong answer. Rather, I hope to get some sense of customs of recordkeepers and TPAs.)

An administrator's selection of an independent qualified public accountant is a fiduciary decision (even when the plan does not pay the IQPA's fee). If all or some of the IQPA's fee will be charged against participants' accounts, an administrator should consider the relation of the IQPA's services and fee to incur no more than a prudent expense.

Has the employer considered charging nonemployee participants' accounts their proportionate share of all plan-administration expenses, including the fees and expenses of the independent qualified public accountant?

Has the employer tried charging nonemployee participants' accounts their proportionate share of the plan-administration expenses?

Thank you for the kind words. Without any expectation or hope for an engagement, my offer of free help to you, Belgarath, remains open. (I'm out-of-office Tuesday.)

Belgarath, I have experience with situations involving near-insolvent, insolvent, and bankrupt employers. I have some practical suggestions about how a fiduciary might get and use help. The ideas depend too much on the particular situation's facts to explain efficiently without a conversation. Feel fee to call me for those explanations. That the employer lacks money need not be an impediment to getting help and correcting what was or wasn't done.

Am I right in recalling that the limit on whether a participant contribution is an affordable portion of the employee/participant's pay refers to the amount required to get self-only coverage? If a participant chooses a self-plus-one or "family" coverage, how do the communications explain the formula for the limit on the participant contribution (recognizing that the limit's amount can vary according to wages and coverage choices)?

I'm curious: For a retirement plan that generally allows participants electronic access to one's account, does any recordkeeper allow an individual participant to instruct that she not have electronic access to her account?

Before one too quickly assumes that no notice is needed, ask for your lawyer's advice about law beyond ERISA, including: Would failing to give notice breach a provision of the deferred compensation agreement or some other contract? Most contracts are deemed to include an implied obligation of good faith and fair dealing, which often is interpreted as obligating a party not to act in a way that deprives or interferes with another party's opportunity to exercise his, her, or its rights under the contract. Would failing to give breach such an obligation? If a right or interest under the plan is a security, does anything in securities law call for a notice or disclosure?

401(k)athryn has solutions. For my curiosity and perhaps your mental challenge, does anyone think it's possible to express the contribution allocations in a formula that would be constant year-to-year?

Under the rule (29 C.F.R. § 2520.101-3), the notice must include the required information and “be written in a manner calculated to be understood by the average plan participant[.]” It’s possible to do so without using the word “blackout”. The rule itself defines “blackout period” as a period in which a participant, beneficiary, or alternate payee is temporarily restrained from doing something one could do in the plan’s ordinary administration. So translating “blackout period” as “no-transaction period” might, if it’s factually sound in the plan’s circumstances, be a sensible label (assuming the notice also includes the required information).

Beyond the task of reminding the employer to sign something once a year, is there any other reason why annual plan amendments could be a bad idea?

Since your query seems to be about what an employer's health plan could provide (and just to satisfy my curiosity so I learn something), why does the employer seek flexibility about covering a participant's stepchild only if the stepchild resides with the participant?