Top of Mind

Forget About the CARES Act and SECURE Act: This New Regulatory Guidance Will Be the Real Game Changer!

While the CARES Act and SECURE Act have provided some meaningful changes to retirement plan law - most notably, relief from Required Minimum Distributions (RMDs) and provisions allowing for COVID-19 withdrawals and loans - there is nothing in either piece of legislation that is truly groundbreaking.

Enter the Department of Labor (DOL). In a wonderful cap to Preston Rutledge’s tenure at the Employee Benefits Security Administration (EBSA), the agency finalized an electronic disclosure rule on May 27, 2020 that will change retirement plan communication as we know it. Here’s why:

  • Many of the disclosures required under ERISA can now be delivered to participants electronically — Participants are currently receiving lots of disclosures via mail, primarily due to the fact that the prior DOL guidance in this regard, a 2002 safe harbor, was basically unworkable for many employers. These current paper disclosures include: Summary Plan Descriptions (SPDs) and the SPD amendments known as SMMs, Summary Annual Reports (SARs), Investment-related notices, such as fee and blackout notices, QDIA notices, and participant account statements. That is an awful lot of paper, mailings, and tracking that will no longer be necessary under the new rule.
  • Eliminating this expensive, time-consuming work on the part of retirement plan recordkeepers/TPAs will be a huge plus for all involved — Think about the costs of mailing and tracking all of this paper; costs that are directly or indirectly passed along to plan sponsors and/or participants. With this new rule, they are gone. Also, the elimination of such time-consuming transactional work will free up the time of recordkeepers and TPAs to work with plan sponsors on more strategic initiatives, such as participant engagement and financial wellness/independence.
  • These new rules will likely spread to other aspects of recordkeeper communications — Recordkeepers tend to send a lot of 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. Again, this can only benefit the fee equation for plan sponsors.

There is one caveat, as discussed in a previous Top of Mind post: a one-time disclosure to all plan participants/beneficiaries allowing participants the option to continue to receive paper must be distributed via mail, before electronic delivery can be used for future documents. During a pandemic, a massive mailing like this might be problematic for some recordkeepers/TPAs. Thus, plan sponsors might not transition away from paper immediately.

But, make no mistake, paper is dead, and e-disclosure is clearly the future of retirement plan communication. A future that is truly a game changer for retirement plan sponsors!

Do you have additional questions or thoughts? Feel free to let me know on LinkedIn, Twitter or at

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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