Am I required to send notices by paper or by email?
Yes, Yes, and both.
If you choose to distribute your required retirement plan notices electronically, you need to know that The Department of Labor (DOL) has issued detailed requirements for electronic noticing. They understand electronic distribution’s cost benefits for plans and companies, but they also need to ensure that notices are delivered reliably. Therefore, before deciding to utilize electronic delivery, make sure you review the DOL’s requirements. You may also want to engage an ERISA expert to ensure your operational procedures are in place and documented, to avoid any costly fines in the event of a DOL audit.
If you’d rather send notices by USPS mail, while you reduce the burden of following the DOL’s electronic delivery guidelines, you add the responsibility of confirming accurate census information. Over the last few years, the DOL has placed the burden of proof squarely on plan sponsors, to not only show that required notices have been sent to a participant’s address on file, but that said address is up-to-date and accurate.
Historically, investigating only “returned to sender” notices was the acceptable practice. However, if a participant has changed addresses and not updated their information with the plan, or if they didn’t register for USPS forwarding (or the forwarding has expired) the notice will be delivered to an inaccurate address, and the plan sponsor would have no way of knowing. Therefore, the DOL recommends you either get a confirmation receipt or another form of address verification for all participants (especially participants whom the company no longer employs). If you’re ever the unlucky subject of a DOL inspection, they will likely require documentation of this verification process, along with proof of mailing.
Based on the risks of both electronic delivery and USPS mail, we recommend you develop a comprehensive operational process utilizing both email and first class mail. Sending electronic notices to your active employees’ personal email addresses and requiring receipt confirmation should help you reach a very high percentage of your employed participants. Then, contact anyone who doesn’t confirm receipt and ascertain the best way to get them their required notice. Note: Using personal email addresses allows for a higher percentage of communication receipt, even if the employee leaves the company. For non-active employees, using first class mail provides you with proof of distribution. However, you should also consider adding a form of verification to prove delivery.
By implementing these suggestions (or a similar procedure) and documenting the results, your plan should be protected in the case of DOL questioning or an audit.
For advice on how to develop this policy and procedure, or to discuss ways to outsource these responsibilities, please contact us at Plan Notice. Our solution will guarantee that your required notice plan meets the DOL’s requirements.
