Electronic Document Delivery: What Plan Sponsors Need to Know

After much anticipation, the Department of Labor (DOL) and the Employee Benefits Security Administration (EBSA) published their final rule on electronic disclosure. The legislation allows for plans to transition to an electronic environment for the delivery of required disclosures and most other plan communications to participants, eliminating a significant waste of time, money, and paper. While the ruling may appear obvious, it will have a significant impact on retirement plan communication.

Benefits of the Rule

Currently, participants receive a significant number of paper disclosures, such as Summary Plan Descriptions (SPDs) and the SPD amendments known as SMMs, Summary Annual Reports (SARs), investment-related notices, QDIA notices, and participant account statements. While prior DOL guidance on electronic disclosure was provided in 2002, the Safe Harbor was unworkable for many employers. Thus, plans have been forced to provide these expensive and time-consuming mailings for many years. The cost to mail and track all this paper is directly or indirectly passed along to plan sponsors and/or their participants.

The new rule allows retirement plan sponsors to electronically deliver required disclosures and other communications to plan participants by default, eliminating a costly burden. Additionally, the removal of such time-consuming transactional work will free up the time of recordkeepers and third-party administrators (TPAs) to work with plan sponsors on more strategic initiatives, such as participant engagement and financial wellness/independence.

It is also likely that the new rule will spread to other aspects of recordkeeper communications. Recordkeepers tend to send many paper documents to participants that are not DOL-required disclosures; look for this to change as well, as paper-fulfillment operations are eliminated or streamlined. This should also benefit the fee equation for plan sponsors.

What Needs to Happen

In order to take advantage of these benefits and transition to an electronic environment, plan sponsors need to complete some action steps. Initially, a one-time disclosure must be distributed by mail to all plan participants and beneficiaries, allowing the option to continue to receive paper before electronic delivery can be used for future documents.

Plan sponsors must also address the current delivery state of their participant communications with their recordkeeper and/or TPA. This is important in establishing a baseline for how much work needs to be done to transition to a truly paperless environment. Since many recordkeepers have already taken steps to move certain participant communications to electronic delivery, the goal of this exercise should be to determine which documents are still being sent by mail. Thus, plan sponsors and recordkeepers/TPAs can work together to move to full e-delivery, unless a participant elects to continue with paper.

Additionally, a timeline for transitioning the mailed documents to e-delivery should be discussed with the plan’s recordkeeper/TPA. While the new Department of Labor (DOL) rules for e-delivery of certain documents, including participant statements, is technically not effective until July, it can be implemented now, due to the pandemic. However, as previously stated, implementation requires a one-time paper mailing. In the current COVID-19 environment, some recordkeepers and TPAs are still growing accustomed to the new normal of less paper fulfillment; thus, an immediate paper mailing to fulfill this requirement may not be the most practical course of action. However, transitioning to an electronic delivery environment should not be indefinitely delayed; therefore, plan sponsors should work with their recordkeeper/TPA and commit to a timeline.

Plan sponsors must address the robustness of their recordkeeper/TPAs e-delivery infrastructure. The transitioning of communication should in no way negatively impact participants, as participant communication is often challenging to begin with. Thus, the participant communication portals of recordkeepers and TPAs should be test-driven by plan sponsors to ensure they offer a suitable alternative to paper communications. For example, a plan’s Summary Plan Description is likely already available on the recordkeeper’s participant website, but is it easy to find? Some other questions to ask include: What about the app? Is the recordkeeper/TPA currently pushing text notifications about important plan features to participants? Does the overall experience engage participants,

or are they not even registering for online access? Ultimately, the transition to e-delivery should be viewed as an opportunity to step up the overall participant engagement efforts.


The final electronic disclosure rules stand to offer significant benefits to retirement plan sponsors. Plan sponsors should take full advantage of the new rules not only to reduce plan costs and create operating efficiencies, but also to greatly enhance the participant communication experience.

Editor’s note: This piece was adapted from a Top of Mind blog post. To read the original piece, please click here.

Note: This feature is to provide general information only, does not constitute legal advice, and cannot be used or substituted for legal or tax advice. Opinions expressed are those of the author, and do not necessarily represent the opinions of Cammack Retirement Group.

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