DOL rolls out proposed rule on SECURE 2.0 paper benefit statements

SECURE 2.0 paper benefit statement requirement 

ERISA requires plans to provide ongoing benefit statements to plan participants in defined contribution (DC) and defined benefit (DB) plans. Under Section 338 of SECURE 2.0, DC plan sponsors must now send a paper benefit statement to participants at least once per year, effective for plan years beginning after December 31, 2025. Prior to SECURE 2.0, plan sponsors could avoid sending paper statements by adhering to one of two electronic delivery safe harbors. The proposed rule incorporates this new paper benefit statement requirement into the existing electronic delivery safe harbors.

2002 electronic delivery safe harbor

Under the 2002 electronic delivery safe harbor, the following workers can receive ERISA disclosures electronically, rather than on paper:

• “Wired at work” employees—This refers to individuals who use a computer as part of their normal job. While these participants can request paper copies, sponsors can use eDelivery as the standard method of distribution.
• Employees who aren’t “wired at work”—These individuals can only receive ERISA disclosures electronically if they affirmatively consent after receiving adequate notice. 

What’s new under the proposed DOL rule?

• “Wired at work” participants who become eligible after December 31, 2025, must receive an initial paper notice informing them they can opt out of electronic delivery.
• Participants who aren’t “wired at work” (or beneficiaries) must receive an advance statement in paper form, explaining how to consent to electronic delivery.

Plan sponsors who follow these 2002 safe harbors may continue to deliver all ERISA disclosures electronically to participants who are “wired at work” or consented to electronic delivery. These participants are exempt from the SECURE 2.0 paper notice requirements.

2020 electronic delivery safe harbor

The 2020 safe harbor, often referred to as the “notice-and-access” approach, allows ERISA disclosures to be made available online, provided plan sponsors send participants a text message or email with a notice of internet availability (NOIA). The NOIA must include specific information, such as how the participant can request a paper copy or opt out of electronic delivery altogether. It must be sent whenever sponsors provide a new disclosure.

Alternatively, plan sponsors can email ERISA disclosures to participants if they have their personal or work email addresses on file. 

Before using either approach, plan sponsors must send an initial paper notice informing participants that they’ll begin receiving electronic disclosures and that they have the right to opt out of eDelivery at no cost. Any participant with an invalid email address must receive paper disclosures.

What’s new under the proposed DOL rule?

The updates to the 2020 safe harbor require plan sponsors to provide at least one paper benefit statement per year for DC plans unless a participant opts in to electronic delivery.

Under the proposed rule:

• Participants must be allowed to ask for electronic delivery if they’re getting paper benefit statements.
• Both methods of delivery (electronic and paper) must include instructions on how to request the alternative delivery method.
• Plans can’t charge fees for sending paper statements, even duplicate ones.

Alternatives to the eDelivery safe harbors

Adherence to the 2002 and 2020 electronic delivery safe harbors isn’t required. ERISA mandates that plans must “use measures reasonably calculated to ensure actual receipt” of the disclosures. This means plan sponsors can use other electronic delivery methods. But, if they do, they must be prepared to demonstrate that participants actually received the disclosures. Under the new proposed rule, DC plans that don’t use one of the eDelivery safe harbors must now also provide at least one paper benefit statement each calendar year.

IRS notice requirements

One area of potential confusion is that the above safe harbors apply only to ERISA disclosures under the DOL’s jurisdiction, such as summary plan descriptions (SPDs), benefit statements, qualified default investment alternative (QDIA) notices, and fee disclosures. The IRS has its own guidelines that plan sponsors must follow to send the IRS safe-harbor, automatic-enrollment, and rollover notices electronically. Although the DOL’s standards may be similar to the IRS’s rules, they aren’t identical, and the IRS hasn’t formally adopted them.

What the proposed regs mean for you

At this time, plan sponsors should determine which electronic delivery safe harbor (if any) their plan relies on and work with their service provider to ensure compliance with the amended rules. This includes, but isn’t limited to, confirming that the new paper notice and paper benefit statement requirements are being satisfied and align with the applicable safe harbor.

While the proposed rules apply to plan years starting after December 31, 2025, the DOL won’t enforce the new rules until the final regulations are issued, as long as plans follow the proposal in good faith and with a reasonable interpretation.

Please visit our SECURE 2.0 resource center for more insight to help you navigate your responsibilities.

FAQs

What’s the effective date for the SECURE 2.0 paper benefit statement requirements?

The requirement is effective for plan years beginning after December 31, 2025. Defined contribution plans must provide at least one paper statement annually.

How do the DOL’s proposed rules affect the 2002 electronic delivery safe harbor? 

The 2002 safe harbor still applies. “Wired at work” participants who become eligible after December 31, 2025, however, must receive an initial paper notice describing how to opt out of electronic delivery. Those not “wired at work” must receive a paper statement explaining how to consent to electronic delivery.

What changes is the DOL proposing for the 2020 electronic delivery safe harbor? 

Defined contribution plans must send one paper benefit statement each year unless a participant affirmatively consents to electronic delivery. The rule works both ways—participants getting electronic copies can also request paper statements. Each statement needs to explain how to change the delivery method and must include the plan representative’s contact information. Plans can’t charge fees for sending paper statements, including duplicate requests.

Are there exceptions to the SECURE 2.0 paper benefit statement requirement?

Yes. Plan sponsors don’t have to send paper statements to participants who affirmatively consent to electronic delivery according to the updated 2002 or 2020 electronic delivery safe harbors.