Improvements to 401(k) Participant Communications Pending
The Department of Labor aims to ease consumer use by allowing new electronic delivery proposal.
The Department of Labor ("DOL") has proposed a new rule allowing online disclosures (via a secure website) of most 401(k) participant notices. The proposal would also allow plan administrators to send notices via e-mail as an alternative to posting information to a website. Currently, the IRS and DOL make it unnecessarily difficult to electronically deliver most 401(k) notices. The DOL last updated its electronic delivery rules seventeen years ago.
The proposal should become final in the spring/summer of 2020. The DOL is currently asking for comments on the proposal. Among the advantages to plan sponsors and participants, the proposal:
- Reduces the cost of paper, printing and mailing participant notices (estimated to cost plans $240 million annually).
- Provides more effective delivery and security of retirement plan communications allowing participants access to the information when its most convenient.
The new proposal comes with new participant protections:
- The plan administrator must provide all 401(k) participants with a paper notice that online disclosure is being used.
- An electronic notice must be sent to participants letting them know when notices are posted on the website. A single notice of availability would be allowed when several notices are delivered together.
The proposal would apply to most participant notices. For example:
- Participant account statements
- Summary plan descriptions
- Summary annual reports
- Notice of plan default investments
We are following the proposal as it winds its way through the regulatory process and will keep you informed. You can also reach out to your Boston Private advisor with any questions you may have.
Boston Private is pleased to announce a partnership with Doug Fisher, a Washington Policy expert, who will offer a series of insights into a number of reform proposals making their way through Congress. Doug provides strategic insight into the political and policy developments in Washington which impact the wealth management business. Advising wealth management clients on business, tax, and retirement issues, he helps firms and their clients understand the legislative and regulatory landscape and how to maximize business opportunities.
Doug served as tax counsel to the U.S. Senate Finance Committee and led the development of the Roth IRA, Simple retirement plan, the health savings account, and the 529 college savings plan. He co-authored the Small Business Jobs Protection Act, the Balanced Budget Act of 1997 and the Health Insurance Portability and Accountability Act.
After serving on the Senate Finance Committee, Doug led Fidelity Investments’ federal government relations and public policy teams. During that time, he focused on financial services, tax, retirement, and health care policy impacting Fidelity and its clients.
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