Electronic Delivery of IRS Notices

[LANDO]

The 2020 Department of Labor "Notice and Access" safe harbor may be used to deliver ERISA notices electronically to plan participants.  The Notice and Access safe harbor very generally requires an initial paper notice, followed by a notice of internet availability, and then notices may be posted to a website.  This method is not overtly a safe harbor for delivering notices required under the IRS Code, like 401(k) safe harbor notices.

IRS electronic delivery safe harbors are outlined in Treas. Reg. § 1.401(a)-21. The two methods outlined are:

• Consumer consent - basically similar to the "Affirmative Consent" DOL safe harbor, or 
• Effective availability - participants must have effective ability to access the notice 

My questions are:

• Are other providers who are using the DOL Notice and Access approach to delivering ERISA notices assuming this approach also satisfies the IRS Effective Availability safe harbor for delivery of IRS notices?  More specifically, are you using the DOL Notice and Access delivery method to deliver your 401(k) safe harbor notices? 
• Does anyone feel like the DOL Notice and Access safe harbor might not satisfy the IRS electronic delivery requirements?

 

[LANDO]

No one?  Really?

[Paul I]

Attached is an excellent discussion of the various IRS and DOL rules prepared by the law firm of Harter Secrest & Emery LLP last September.  They do a great job presenting the alternatives available under each agency's rules.  The DOL has multiple methods depending upon the employees' access to a computer at work that can be used - and employees are permitted to use - for interacting with the plan.

In all instances, paper must be an available choice to any participant.  In all instances, a participant can rescind their consent to receive electronic delivery.  Within the DOL rules, there also disclosures about electronic deliver that must be presented to the participant before the participant can consent to electronic delivery.

These requirements mean a plan must always be prepared to make paper copies available upon request, and to accommodate participants who do not have or have access to computers capable of accessing the plan information.

Another DOL requirement is for the plan to have the ability to reasonably ensure actual receipt of the document.  This is not a trivial requirement and does require the sender to be able to demonstrate that documents are being received by participants.

The footnote at the bottom of page 2 addresses in part some of the questions.

Also note the final paragraph on page 7 a new requirement that will be effective come January 1, 2026.

 

HSE_ELECTRONIC_DELIVERY_RULES_FOR_BENEFIT_PLAN_COMMUNICATIONS.pdf