Summary annual report question

[bzorc]

Can Summary Annual Reports be delivered electronically, for example, through e-mail? I think they can, but I would like to know for sure. Is there a cite for this, if the answer is yes?

Thanks.

[E as in ERISA]

The default is still paper. But they can be delivered electronically to the extent you meet the safe harbor requirements in the final regulations. That regulation allows them to be delivered electronically to employees who have computers at work and to other participants and beneficiaries who have received the necessary notification, have accepted electronic delivery and who have demonstrated that they can read the document in the format delivered (e.g., pdf, html, etc.). See the explanation and regs at www.dol.gov/pwba/regs/fedreg/final/2002008499.htm.

[Guest PattyMc]

I will be sending the Health and Welfare SARs electronically for the first time this year and had a question about who they are sent to. It would be easier to send an email with the SARs attached to everyone in the company, as opposed to just those employees who were participants during the plan year. Is there any harm in that?

I know about the additional burdens associated with sending the SAR electronically to terminated employees, so I'll be sending those out on paper.

FYI - The Retirement SAR is sent separately by our finance department.

Thanks.

[E as in ERISA]

If you don't meet the safe harbor for electronic format, then you could be subject to penalties. The criminal penalties for wilful noncompliance with reporting and disclosure penalties just increased to $100,000 and 10 years in jail for individuals, $500,00 for corporations (under Sarbanes-Oxley).

[Guest PattyMc]

I'm confused. If I'm sending the SAR to more employees than were actually participating in the plan, how is than non-compliance?

[E as in ERISA]

If you're sending it electronically instead of on paper -- and you don't meet the safe harbor -- then you're not in compliance.

[Guest PattyMc]

Your last statement is incorrect. Plans are not required to comply with the conditions of the safe harbor. But if they do, the plan's electronic delivery method will be found to be consistent with the DOL's requirement that the documents be furnished by a method "reasonably calculated to ensure actual receipt."

[E as in ERISA]

What if I soften my statement to say: If you're sending it electronically instead of on paper -- and you don't meet the safe harbor -- then there is no guarantee that you are in compliance (i.e., you may be at significant risk that you are not in compliance)"? This then becomes a "facts and circumstances" situation. If everyone has computers on their desks, I think that you'll generally meet the safe harbor. But based on the comments in the preamble to the regulations, if you have users whose only access is a kiosk at the office or a home computer, then there is risk that the DOL would find that an email SAR is not a method "reasonably calculated to ensure actual receipt."