Can disclosure be made electronically under the ERISA §404(a)(5) Regulations?

Yes.  Plan-related information included in the participant benefit statements may be disclosed electronically under the electronic distribution rules that apply to benefit statements.

However, investment-related information, while it may be included in the participant benefit statements, may only be distributed electronically if the following guidelines are followed:

  1. An “initial notice” must be provided that includes the following:
    1. a statement indicating that the required disclosures will be made electronically, if the individual voluntarily provides an e-mail address for receiving the disclosures electronically;
    2. a brief description of the disclosures that will be furnished electronically and how such information can be accessed;
    3. a statement that the individual has the right to request a paper copy of the electronically provided information, free of charge;
    4. a statement that the individual may opt out at any time of receiving the information electronically (and the process to opt out of the system); and
    5. a procedure for updating the individual’s e-mail address.
  2. In connection with the initial notice, the individual must voluntarily provide an e-mail address for purposes of receiving electronic disclosures.
  3. An annual notice must be provided at the beginning of each year that contains similar information to the initial notice (including the individual’s right to “opt out” of receiving electronic disclosures). The annual notice may only be sent electronically if the plan administrator has evidence that the participant or beneficiary has electronically interacted with the plan since the last annual (or initial) notice was delivered.
  4.  “Appropriate and necessary measures reasonably calculated to ensure that the electronic delivery system results in actual receipt of the transmitted information” must be taken.   For example, the plan administrator could use a “return receipt” to confirm receipt of the disclosures.
  5. Appropriate and necessary steps reasonably calculated to ensure that the electronic delivery system protects the confidentiality of personal information must be taken.
  6. The notices must be written in a manner calculated to be understood by the average plan participant.

This article was last updated on August 7, 2012


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