EBSA Proposed Rules

Request for Information Regarding Electronic Disclosure by Employee Benefit Plans   [4/7/2011]
[PDF]
FR Doc 2011-8288
[Federal Register: April 7, 2011 (Volume 76, Number 67)]
[Proposed Rules]               
[Page 19285-19290]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr07ap11-10]                         


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DEPARTMENT OF LABOR

Employee Benefits Security Administration

29 CFR Part 2520

RIN 1210-AB50

 
Request for Information Regarding Electronic Disclosure by 
Employee Benefit Plans

AGENCY: Employee Benefits Security Administration, Department of Labor.

ACTION: Request for information.

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SUMMARY: The Department of Labor is reviewing the use of electronic 
media by employee benefit plans to furnish information to participants 
and beneficiaries covered by employee benefit plans subject to the 
Employee Retirement Income Security Act (ERISA). In 2002, the 
Department adopted standards for the electronic distribution of plan 
disclosures required under ERISA. The purpose of the review is to 
explore whether, and possibly how, to expand or modify these standards 
taking into account current technology, best practices and the need to 
protect the rights and interests of participants and beneficiaries. 
This request for information (RFI) solicits views, suggestions, and 
comments from plan participants and beneficiaries, employers and other 
plan sponsors, plan administrators, plan service providers, health 
insurance issuers, and members of the financial community, as well as 
the general public, on this important issue.

DATES: Comments must be submitted on or before June 6, 2011.

ADDRESSES: You may submit written comments to any of the addresses 
specified below.
     Federal eRulemaking Portal: http://www.regulations.gov. 
Follow the instructions for submitting comments.
     E-mail: e-ORI@dol.gov. Include RIN 1210-AB50 in the 
subject line of the message.
     Mail: Office of Regulations and Interpretations, Employee 
Benefits Security Administration, Room N-5655, U.S. Department of 
Labor, 200 Constitution Avenue, NW., Washington, DC 20210, Attention: 
E-Disclosure RFI.

All submissions received must include the agency name and Regulation 
Identifier Number (RIN) for this rulemaking. Comments received will be 
posted without change to http://www.regulations.gov and http://
www.dol.gov/ebsa, and made available for public inspection at the 
Public Disclosure Room, N-1513, Employee Benefits Security 
Administration, 200 Constitution Avenue, NW., Washington, DC 20210, 
including any personal information provided. Do not include any 
personally identifiable information (such as name, address, or other 
contact information) or confidential business information that you do 
not want publicly disclosed. Comments posted on the Internet can be 
retrieved by most Internet search engines. Comments may be submitted 
anonymously. Persons submitting comments electronically are encouraged 
not to submit paper copies. All comments will be made available to the 
public.

FOR FURTHER INFORMATION CONTACT: Thomas M. Hindmarch, Office of 
Regulations and Interpretations, Employee Benefits Security 
Administration, (202) 693-8500. This is not a toll-free number.

SUPPLEMENTARY INFORMATION:

A. Background

    On July 19, 1977, the Department of Labor (Department) adopted 
general standards governing the delivery of all information required to 
be furnished to participants, beneficiaries, and other specified 
individuals under title I of ERISA.\1\ See 29 CFR 2520.104b-1. These 
standards require that plan administrators use delivery methods 
reasonably calculated to ensure actual receipt of such information by 
plan participants, beneficiaries and other specified individuals. See 
Sec.  2520.104b-1(b)(1). For example, in-hand delivery to an employee 
at his or her worksite is acceptable, as is material sent by first-
class mail. On April 9, 2002, the Department amended Sec.  2520.104b-1 
to establish a ``safe harbor'' for the use of electronic media to 
satisfy the general furnishing requirement in Sec.  2520.104b-1(b). See 
Sec.  2520.104b-1(c).\2\ The specific requirements of the safe harbor 
are discussed below.
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    \1\ 42 FR 37186.
    \2\ 67 FR 17264.
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    On January 18, 2011 the President issued Executive Order 13563, 
``Improving Regulation and Regulatory Review.'' Executive Order 13563 
reaffirms the importance of achieving regulatory goals through the most 
innovative and least burdensome tools available. It also emphasizes the 
importance of public participation in the regulatory process (in 
section 2) and retrospective consideration of existing regulatory 
policies (in section 6).
    In light of these goals, and in consideration of Administration-
wide policies encouraging electronic dissemination of information to 
the public by federal government agencies consistent with the 
principles of transparency, participation, and collaboration, EBSA is 
issuing this RFI to facilitate consideration of its approach to 
electronic disclosure by employee benefit plans. The Department is 
aware that electronic disclosure can be as effective as paper based 
communications, and that it can lower costs and administrative burdens 
and increase timeliness and accuracy for all involved. The Department 
also is aware that some of America's workers may not have reasonable 
access to the Internet, and others may prefer traditional (paper) 
disclosure methods for important financial interactions regarding their 
pensions and other employee benefits.
    The Department recognizes that there have been substantial changes 
in technology since over time, both in the workplace and at home, 
including: The expansion of broadband through cable, fiber optic and 
wireless networks; hardware improvements to servers and personal 
computers improving storage, memory, recovery, and computing power; 
introduction of smart phones, net books and other personal computing 
devices; and social networking (e.g., LinkedIn, Facebook, and Twitter).
    At least some evidence suggests that these changes have resulted in 
a substantial increase in access to and utilization of electronic 
media. For instance, the 2009 U.S. Census Bureau Current Population 
Survey (Census) found that 76.7% of the households in the United States 
have access to the Internet from some location.\3\ The Census data 
further shows that of the 139.1 million private sector workers 
approximately 111.7 million have access to the Internet from some 
location. Of the remaining 27.4 million workers who do not have 
personal access, approximately 10.6 million reside in a household where 
someone else has Internet access.
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    \3\ The Census information may be found at http://
www.census.gov/population/www/socdemo/computer.html.
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    Over the past few years, the Department has engaged in various 
rulemakings and other initiatives involving disclosures to participants 
and beneficiaries. Examples include the qualified default investment 
alternative regulation (29 CFR 2550.404c-5), the participant-level fee 
disclosure regulation (29 CFR 2550.404a-5, 75 FR 64910), the pension 
benefit statement initiative (FAB 2006-03), the annual funding notice 
regulation (29 CFR 2520.101-4; FAB 2009-01; proposed Sec.  2520.101-5, 
75 FR 70625), and the target date fund initiative (75 FR 73987).

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Increasingly, commenters on these initiatives request that the 
Department take recognition of changes in technology, as other federal 
regulatory agencies have, and revisit, update, and modernize the 
electronic disclosure safe harbor to promote electronic disclosure of 
employee benefit plan information to the greatest extent possible. They 
argue that such forms of disclosure would be more efficient, less 
burdensome, and less costly than paper for plans and, therefore, 
participants. Not everyone, however, agrees that electronic disclosure 
is appropriate for all participants and beneficiaries or for all 
disclosures. Some caution against broadening the electronic disclosure 
safe harbor, arguing that some workers do not have reasonable Internet 
access, or that they simply prefer paper over electronically disclosed 
materials even when they have access.
    In light of these differing views and the significance of the 
issues surrounding the use of electronic disclosure, the Department has 
decided to explore whether and how to expand or modify the current 
standards under ERISA applicable to the electronic distribution of 
required plan disclosures. To that end, the Department, through this 
RFI, is soliciting the views of the public on this important issue. Set 
forth below are a list of questions.
    In considering the questions set forth in this RFI, commenters are 
encouraged to take into account the following information:

Electronic Disclosure Under ERISA

    As noted above, on April 9, 2002, the Department established its 
electronic disclosure safe harbor. See Sec.  2520.104b-1(c). As a safe 
harbor, Sec.  2520.104b-1(c) is not the exclusive means for using 
electronic media to satisfy the requirements of Sec.  2520.104b-
1(b)(1). Plan administrators may find that other procedures will allow 
them to meet the general delivery requirements of Sec.  2520.104b-1. 
However, following the conditions of the safe harbor provides assurance 
that the general delivery requirements under Sec.  2520.104b-1(b)(1) 
have been satisfied.
    The safe harbor is available only if: (1) The plan administrator 
takes appropriate and necessary measures reasonably calculated to 
ensure that the system for furnishing documents results in actual 
receipt of transmitted information and protects the confidentiality of 
personal information relating to the individual's accounts and 
benefits; (2) the electronically delivered documents are prepared and 
furnished in a manner that is consistent with the style, format and 
content requirements applicable to the particular document; (3) notice 
is provided to each participant, beneficiary or other individual, in 
electronic or non-electronic form, at the time a document is furnished 
electronically, that apprises the individual of the significance of the 
document when it is not otherwise reasonably evident as transmitted and 
of the right to request and obtain a paper version of such document; 
and (4) upon request, the participant, beneficiary or other individual 
is furnished a paper version of the electronically furnished documents. 
Sec.  2520.104b-1(c)(1)(i) through (iv).
    The safe harbor applies only for two categories of individual 
recipients. The first category consists of participants who have the 
ability to effectively access documents furnished in electronic form at 
any location where the participant is reasonably expected to perform 
his or her duties as an employee and with respect to whom access to the 
employer's or plan sponsor's electronic information system is an 
integral part of those duties. See Sec.  2520.104b-1(c)(2)(i). The 
second category consists of participants, beneficiaries and other 
persons who are entitled to documents under title I of ERISA, but who 
do not fit into the first category. For this category, the safe harbor 
assumes the utilization of electronic information systems beyond the 
control of the plan or plan sponsor. The current safe harbor, 
therefore, provides that the second category of individuals must 
affirmatively consent to receive documents electronically. See Sec.  
2520.104b-1(c)(2)(ii)(A). The safe harbor relief is not available with 
respect to these individuals in the absence of such consent.
    In general, the affirmative consent condition requires plans to 
ensure that an individual has affirmatively consented, in electronic or 
non-electronic form, to receiving documents through electronic media 
and has not withdrawn such consent. Alternatively, in the case of 
documents to be furnished through the Internet or through other 
electronic communication networks, the individual must have 
affirmatively consented or confirmed consent electronically, in a 
manner that reasonably demonstrates the individual's ability to access 
information in the electronic form that will be used to provide the 
information that is the subject of the consent, and must have provided 
an address for the receipt of electronically furnished documents. In 
addition, prior to consenting, the individual must be provided, in 
electronic or non-electronic form, a clear and conspicuous statement 
indicating: (1) The types of documents to which the consent would 
apply; (2) that consent can be withdrawn at any time without charge; 
(3) the procedures for withdrawing consent and for updating the 
participant's, beneficiary's or other individual's address for receipt 
of electronically furnished documents or other information; (4) the 
right to request and obtain a paper version of an electronically 
furnished document, including whether the paper version will be 
provided free of charge; and (5) any hardware and software requirements 
for accessing and retaining the documents. Further, following consent, 
if a change in such hardware or software requirements creates a 
material risk that the individual will be unable to access or retain 
electronically furnished documents, the individual: (1) Is provided 
with a statement of the revised hardware or software requirements for 
access to and retention of electronically furnished documents; (2) is 
given the right to withdraw consent without charge and without the 
imposition of any condition or consequence that was not disclosed at 
the time of the initial consent; and (3) again consents in accordance 
with the requirements above. See Sec.  2520.104b-1(c)(2)(ii).

Electronic Disclosure Under the Internal Revenue Code

    The Department of Treasury and the Internal Revenue Service (IRS) 
have issued guidance relating to the use of electronic media of notices 
or elections with respect to a retirement plan. In 2000, final 
regulations were issued relating to the use of electronic media for the 
delivery of certain participant notices and consents that are required 
to be provided in connection with distributions from retirement plans.
    In 2003, the Department of Treasury and IRS published final 
regulations under section 4980F under the Internal Revenue Code (Code) 
that also apply for purposes of section 204(h) of ERISA (2003 section 
4980F regulations).\4\ Under Q&A-13(c) of Sec.  54.4980F-1, notice 
required under section 4980F of the Code or section 204(h) of ERISA 
(section 204(h) notice) may be provided electronically if certain 
requirements are satisfied. The section 204(h) notice must actually be 
received by the applicable individual or the plan administrator must 
take appropriate and necessary measures reasonably calculated to ensure 
that the method for providing the section 204(h) notice results in 
actual receipt of the notice. In addition, the

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plan administrator must provide the applicable individual with a clear 
and conspicuous statement that the individual has a right to receive a 
paper version of the section 204(h) notice without the imposition of 
fees and, if the individual requests a paper copy of the section 204(h) 
notice, the paper copy must be provided without charge. The 2003 
section 4980F regulations also provide a safe harbor method at 26 CFR 
54.4980F-1, Q&A-13(c)(3), for delivering a section 204(h) notice 
electronically, which is substantially the same as the consumer consent 
rules of E-SIGN (described below under the heading ``Electronic 
Signatures in Global and National Commerce Act'').\5\
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    \4\ 68 FR 17277.
    \5\ The 2003 section 4980F regulations were issued under 
amendments to the Code and ERISA contained in the Economic Growth 
and Tax Relief Reconciliation Act of 2001 (EGTRRA), which was 
enacted after enactment of ESIGN. The EGTRRA amendments, at section 
4980F(g) of the Code and section 204(h)(7) of ERISA, authorize 
regulations allowing section 204(h) notice to be provided using new 
technologies.
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    On October 20, 2006, the Department of Treasury and IRS published 
final regulations under the Code setting forth standards for electronic 
systems that make use of an electronic medium to provide a notice to a 
recipient, or to make a participant election or consent, generally with 
respect to a retirement plan, an employee benefit arrangement, or an 
individual retirement plan.\6\ These regulations provide two methods by 
which such plans or arrangements are permitted to provide an applicable 
notice \7\ to a recipient through the use of an electronic medium. 
Under the first method, an applicable notice is permitted to be 
provided electronically after the recipient consents to the electronic 
delivery of the notice (consumer consent method). The consumer consent 
method reflects the consumer consent requirements in E-SIGN. The second 
method does not require consent by the recipient, but when the 
applicable notice is provided, the recipient must be advised that he or 
she may request and receive the applicable notice in writing at no 
charge (alternative method). In addition, any recipient of the notice 
must be ``effectively able'' to access the electronic medium used to 
provide the notice. See generally 26 CFR 1.401(a)-21(b) and (c). These 
regulations also modified the 2003 section 4980F regulations to require 
that a section 204(h) notice comply with the regulations under Sec.  
1.401(a)-21. The current section 4980F regulations retain the 
requirement in the 2003 section 4980F regulations that the section 
204(h) notice actually be received by the applicable individual or that 
the plan administrator take appropriate and necessary measures 
reasonably calculated to ensure that the method for providing the 
section 204(h) notice results in actual receipt. See 26 CFR 54.4980F-1, 
Q&A-13(c)(1).
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    \6\ 71 FR 61877.
    \7\ Section 1.401(a)-21(e) defines an applicable notice as any 
notice, report, statement, or other document required to be provided 
to a recipient under a retirement plan, employee benefit 
arrangement, or individual retirement plan. Section 1.401(a)-
21(a)(3) provides that Sec.  1.401(a)-21 does not apply to any 
notice, election, consent, disclosure, or other obligation over 
which the Department of Labor or the Pension Benefit Guaranty 
Corporation (PBGC) has interpretive authority under Title I or IV of 
ERISA or to any provision of the Internal Revenue Code over which 
the Labor Department or PBGC has interpretive authority.
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Electronic Disclosure of Proxy Materials and Prospectuses Under 
Securities Law

    In 2007, the Securities and Exchange Commission (SEC) amended its 
rules under the Securities Exchange Act of 1934 to provide a method to 
furnish proxy materials by posting them on an Internet Web site and 
providing shareholders with notice of the availability of the proxy 
materials.\8\ In 2009, the SEC adopted amendments permitting a person 
to satisfy its mutual fund prospectus delivery obligations under the 
Securities Act of 1933 by sending or giving investors a summary 
prospectus and providing the statutory prospectus on an Internet Web 
site.\9\ Under both rules, copies of the documents must be sent at no 
charge to shareholders requesting such copies. See 17 CFR 240.14a-16; 
17 CFR 230.498. The SEC has also previously provided interpretive 
guidance on the use of electronic media to deliver information under 
the federal securities law.\10\
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    \8\ 72 FR 4148 and 72 FR 42221.
    \9\ 74 FR 4546.
    \10\ 60 FR 53458, 61 FR 24644, 65 FR 25843, and 73 FR 45862.
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2006 ERISA Advisory Council Working Group Report on Prudent Investment 
Process

    On August 9, 2006, and September 21, 2006, a working group of the 
ERISA Advisory Council held a hearing on numerous issues pertaining to 
the management of plan assets, including the use of electronic media 
for disclosures required by regulations under section 404(c) of ERISA. 
Thirteen witnesses testified at this hearing. In response to this 
hearing, the working group issued the ``Report of the Working Group on 
Prudent Investment Process.'' With respect to the Department's 
electronic disclosure safe harbor as applied to defined contribution 
pension plans, the Report states:

    The Working Group would like to recommend to the Department of 
Labor that the Department should reconsider its rules for electronic 
transfer of notices and the delivery of `sufficient information.' 
The Working Group heard extensive testimony regarding the growth of 
the internet and its use by plan participants. Access to and use of 
the internet has grown significantly since the DOL first considered 
electronic delivery. The Working Group recommends that the 
electronic delivery standard should be relaxed from the `integral 
part of the employee's duties' standard currently employed to a 
`reasonable access' standard.

This Report can be accessed at http://www.dol.gov/ebsa/publications/
AC_1106A_report.html.

2007 ERISA Advisory Council Working Group Report on Participant Benefit 
Statements

    On July 12, 2007 and September 18, 2007, a working group of the 
ERISA Advisory Council held a public hearing on the pension benefit 
statement requirements under section 105 of ERISA, as amended by 
section 508 of the Pension Protection Act of 2006, Public Law 109-280, 
120 Stat. 949-952. Thirteen witnesses testified at this hearing. In 
response to this hearing, the working group issued the ``Report of the 
Working Group on Participant Benefit Statements.'' In this Report, the 
Working Group recommended that ``the Department of Labor should update 
its regulations regarding electronic communication to a `reasonable 
access' standard as in the Department of Treasury safe harbor 
regulation in recognition of the continued advancement in Web-based 
communication and the increase in its use by participants.'' In support 
of this recommendation, the Report explains:

    Following an animated discussion, the Working Group came to a 
consensus that although the American workforce is becoming more 
computer literate, it is not yet appropriate to make electronic 
delivery of participant statements the norm. In addition to access 
and ability to use issues, many participants who are computer 
literate are better served with paper when managing their plan 
asset. However, the Treasury rules regarding communication provide 
incentive for plan sponsors to migrate to electronic delivery. In 
any event, the new regulations should reexamine the use of 
electronic communication for benefit statements to recognize the 
changes in technology and the participant group's use of it.

This Report can be accessed at http://www.dol.gov/ebsa/publications/AC-
1107c.html.

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2009 ERISA Advisory Council Report on Promoting Retirement Literacy and 
Security by Streamlining Disclosures

    On July 23, 2009 and September 15, 2009, the ERISA Advisory 
Council, in furtherance of its focus on the issue of promoting 
retirement literacy and security by streamlining disclosures to 
participants and beneficiaries, held a public hearing to study the 
efficacy of ERISA's reporting and disclosure schemes, as well as 
problems and costs related to such disclosures. Approximately 18 
witnesses testified at this hearing. Upon conclusion of the hearing, 
the full ERISA Advisory Council reached consensus and issued a report 
entitled ``Promoting Retirement Literacy and Security by Streamlining 
Disclosures.'' In this Report, the Council recommended that:

    [T]he Department of Labor permits plan administrators to rely on 
the IRS Regulations in order to comply with ERISA's disclosure 
requirements. The Council believes that the IRS Regulations will 
adequately protect the rights of those participants who are actively 
employed because it will generally be very simple for administrators 
to determine whether active employees have reasonable access to the 
electronic medium used to furnish the disclosure. The Council 
believes that administrators will not furnish those individuals who 
are not working actively--such as retirees or beneficiaries--with 
electronic disclosure unless the administrator has a working 
electronic mail address for such individuals. In that way, 
participants who are not actively employed and plan beneficiaries 
will be protected.

In support of this recommendation, the Report explains:

    Electronic communications have enormously improved the 
retirement system for both plans covered by ERISA and their 
participants. They have improved participant education, retirement 
planning, and plan participation. Electronic communications have 
allowed plans to furnish more information to participants and 
beneficiaries for less cost. They have simplified plan 
administration and improved plan recordkeeping. All of these 
benefits of electronic communication have improved retirement 
security, which was and remains an underlying goal of ERISA. The 
Council believes that this goal of retirement security would be 
better served if the DOL would expand the array of electronic media 
that plan administrators may use to satisfy ERISA's disclosure 
requirements.

The Report can be reviewed at http://www.dol.gov/ebsa/publications/
2009ACreport2.html.

Electronic Signatures in Global and National Commerce Act

    The Electronic Signatures in Global and National Commerce Act (E-
SIGN), 17 U.S.C. 7001-7021, generally provides that electronic records 
and signatures have the same legal effect as their paper 
counterparts.\11\ When a statute, regulation, or other rule of law 
requires that information relating to a transaction be provided or made 
available to a consumer \12\ in writing, section 101(c) of E-SIGN 
requires that the consumer must first affirmatively consent to receive 
the information electronically in a manner that reasonably demonstrates 
the consumer's ability to access the information in electronic form. 17 
U.S.C. 7001(c). However, section 104(d)(1) of E-SIGN, 17 U.S.C. 
7004(d)(1), authorizes a Federal regulatory agency to exempt, without 
condition, a specified category or type of record from the consumer 
consent requirements in section 101(c). The agency may issue an 
exemption only if it is necessary to eliminate a substantial burden on 
electronic commerce and will not increase the material risk of harm to 
consumers.
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    \11\ The rules of section 101 of E-SIGN do not apply to certain 
consumer notices. These include consumer notices that are necessary 
for the protection of a consumer's health, safety, or shelter (e.g., 
cancellation of health benefits or life insurance and foreclosure on 
a credit agreement secured by an individual's primary residence). 
See section 103(b)(2)(B) and (C) of E-SIGN.
    \12\ Section 106(1) of E-SIGN generally defines a consumer as an 
individual who obtains products or services used primarily for 
personal, family, or household purposes.
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B. Request for Information

    The purpose of this RFI is to solicit views, suggestions and 
comments from plan participants and beneficiaries, employers and other 
plan sponsors, plan administrators, plan service providers, health 
insurance issuers, and members of the financial community, as well as 
the general public on whether, and possibly how, to expand or modify 
the Department's current electronic disclosure safe harbor. To 
facilitate consideration of the issues, the Department has set forth 
below a number of questions. Respondents need not answer every 
question, but should identify, by its number, each question addressed. 
Interested persons are also encouraged to address any other matters 
they believe germane to the general topic of the RFI.

Access and Usage Questions

    1. What percentage of people in this country has access to the 
Internet at work or home? Of this percentage, what percentage has 
access at work versus at home? Does access vary by demographic groups 
(e.g., age, socioeconomic, race, national origin, etc.)?
    2. What percentage of participants and beneficiaries covered by an 
ERISA plan has access to the Internet at work or home? Of this 
percentage, what percentage has access at work, at home, or both? Does 
access vary by demographic groups (e.g., age, socioeconomic, race, 
national origin, etc.)? What percentage of participants and 
beneficiaries uses the Internet to access private information such as 
personal bank accounts?
    3. What percentage of pension benefit plans covered by ERISA 
currently furnish some or all disclosures required by ERISA 
electronically to some or all participants and beneficiaries covered 
under these plans? Please be specific regarding types of plans (e.g., 
single-employer plans versus multiemployer plans, defined benefit 
pension plans versus defined contribution pension plans, etc.), types 
of participants and beneficiaries (e.g., active, retired, deferred 
vested participants) and types of disclosures (e.g., all required title 
I disclosures versus select disclosures).
    4. What percentage of employee welfare benefit plans covered by 
ERISA currently furnish some or all disclosures required by ERISA 
electronically to some or all participants and beneficiaries covered 
under these plans? Please be specific regarding types of welfare plans 
(e.g., health, disability, etc.), types of participants and 
beneficiaries (e.g., active employees, retirees, COBRA Qualified 
Beneficiaries, etc.) and types of disclosures (e.g., all required title 
I disclosures versus select disclosures).
    5. What are the most common methods of furnishing information 
electronically (e.g., e-mail with attachments, continuous access Web 
site, etc.)?
    6. What are the most significant impediments to increasing the use 
of electronic media (e.g., regulatory impediments, lack of interest by 
participants, lack of interest by plan sponsors, access issues, 
technological illiteracy, privacy concerns, etc.)? What steps can be 
taken by employers, and others, to overcome these impediments?
    7. Is there evidence to suggest that any increase in participant 
and beneficiary access to, and usage of, the Internet and similar 
electronic media in general equates to an increased desire or 
willingness on the part of those participants and beneficiaries to 
receive employee benefit plan information electronically? If so, what 
is it?
    8. Are there any new or evolving technologies that might impact 
electronic disclosure in the foreseeable future?

[[Page 19289]]

General Questions

    9. Should the Department's current electronic disclosure safe 
harbor be revised? If so, why? If not, why not?
    10. If the safe harbor should be revised, how should it be revised? 
Please be specific.
    11. Should a revised safe harbor have different rules or conditions 
for different types of employee benefit plans (e.g., pension versus 
welfare plans)? If so, why and what differences?
    12. Should a revised safe harbor have different rules or conditions 
for different types of disclosures (e.g., annual funding notice, 
quarterly benefit statement, COBRA election notice, etc.)? If so, why 
and what differences?
    13. Should a revised safe harbor have different rules or conditions 
for different recipients entitled to disclosures (active employees, 
retirees, COBRA Qualified Beneficiaries, etc.)? If yes, why, and how 
should the rules or conditions differ?
    14. To what extent should the Department encourage or require 
pension and welfare benefit plans to furnish some or all disclosures 
required under title I of ERISA through a continuous access Web 
site(s)? In responding to this question, please address whether and how 
frequently participants and beneficiaries should be notified of their 
ability to access benefit information at the Web site(s) and the most 
appropriate means to provide such notice. For example, should 
participants and beneficiaries receive a monthly notification of their 
ability to access benefit information or should they receive a 
notification only when an ERISA-required disclosure is added to the Web 
site? How should such notifications be furnished (e.g., paper, e-mail, 
etc.)? Please also address what steps would be needed to ensure that 
participants and beneficiaries understand how to request and receive 
paper copies of the disclosures provided on the Web site(s).
    15. Who, as between plan sponsors and participants, should decide 
whether disclosures are furnished electronically? For example, should 
participants have to opt into or out of electronic disclosures? See 
Question 26.
    16. Should a revised safe harbor contain conditions to ensure that 
individuals with disabilities are able to access disclosures made 
through electronic media, such as via continuous access Web sites? If 
so, please describe the conditions that would be needed. Also, please 
identify whether such conditions would impose any undue burdens on 
employee benefit plans, including the costs associated with meeting any 
such conditions. What burden and difficulty would be placed on 
employees with disabilities if the Web sites and/or other electronic 
communication were not accessible?

Technical Questions

    17. If a plan furnishes disclosures through electronic media, under 
what circumstances should participants and beneficiaries have a right 
to opt out and receive only paper disclosures?
    18. The Department's current regulation has provisions pertaining 
to hardware and software requirements for accessing and retaining 
electronically furnished information. In light of changes in 
technology, are these provisions adequate to ensure that participants 
and beneficiaries, especially former employees with rights to benefits 
under the plan, have compatible hardware and software for receiving the 
documents distributed to their non-work e-mail accounts?
    19. Some have indicated that the affirmative consent requirement in 
the Department's current electronic disclosure safe harbor is an 
impediment to plans that otherwise would elect to use electronic media. 
How specifically is this requirement an impediment? Should this 
requirement be eliminated? Is the affirmative consent requirement a 
substantial burden on electronic commerce? If yes, how? Would 
eliminating the requirement increase a material risk of harm to 
participants and beneficiaries? If yes, how? See section 104(d)(1) of 
E-SIGN.
    20. In general, the E-SIGN Act permits electronic disclosure of 
health plan materials but does not apply to cancellation or termination 
of health insurance or benefits electronically. Are there special 
considerations the Department should take into account for group health 
plan disclosures (including termination of coverage and privacy 
issues)?
    21. Many group health plan disclosures are time-sensitive (e.g., 
COBRA election notice, HIPAA certificate of creditable coverage, 
special enrollment notice for dependents previously denied coverage 
under the ACA, denials in the case of urgent care claims and appeals). 
Are there special considerations the Department should take into 
account to ensure actual receipt of time-sensitive group health plan 
disclosures?
    22. Do spam filters and similar measures used by non-workplace 
(personal) e-mail accounts, pose particular problems that should be 
taken into consideration?
    23. What is the current practice for confirming that a participant 
received a time-sensitive notice that requires a participant response?
    24. What are current practices for ensuring that the e-mail address 
on file for the participant is the most current e-mail address? For 
example, what are the current practices for obtaining and updating e-
mail addresses of participants who lose their work e-mail address upon 
cessation of employment or transfer to a job position that does not 
provide access to an employer provided computer?

Comments Regarding Economic Analysis, Paperwork Reduction Act, and 
Regulatory Flexibility Act

    Executive Order 12866 (EO 12866) requires an assessment of the 
anticipated costs and benefits to the government and the public of a 
significant rulemaking action, and of the alternatives considered, 
using the guidance provided by the Office of Management and Budget. 
Under EO 12866, a determination must be made whether implementation of 
this rule will be economically significant. A rule that has an annual 
effect on the economy of $100 million or more is considered 
economically significant.
    In addition, the Regulatory Flexibility Act may require the 
preparation of an analysis of the impact on small entities of proposed 
rules and regulatory alternatives. A regulatory flexibility analysis 
must generally include, among other things, an estimate of the number 
of small entities subject to the regulations (for this purpose, plans, 
employers, and issuers and, in some contexts small governmental 
entities), the expense of the reporting, recordkeeping, and other 
compliance requirements (including the expense of using professional 
expertise), and a description of any significant regulatory 
alternatives considered that would accomplish the stated objectives of 
the statute and minimize the impact on small entities. For this 
purpose, the Agency considers a small entity to be an employee benefit 
plan with fewer than 100 participants.
    The Paperwork Reduction Act requires an estimate of how many 
``respondents'' will be required to comply with any ``collection of 
information'' requirements contained in regulations and how much time 
and cost will be incurred as a result. A collection of information 
includes recordkeeping, reporting to governmental agencies, and third-
party disclosures.
    The Department is requesting comments that may contribute to the 
analyses that will be performed under these requirements, both 
generally and

[[Page 19290]]

with respect to the following specific areas:
    25. What costs and benefits are associated with expanding 
electronic distribution of required plan disclosures? Do costs and 
benefits vary across different types of participants, sponsors, plans, 
or disclosures? Are the printing costs being transferred from plans to 
plan participants and beneficiaries when information is furnished 
electronically?
    26. If electronic disclosure were the default method for 
distributing required plan disclosures, and assuming ``opting out'' 
were an option, what percentage of participants would likely ``opt-
out'' of electronic disclosure in order to receive paper disclosures? 
Should participants be informed of increased plan costs, if any, 
attendant to furnishing paper disclosures at the time they are afforded 
the option to opt out or into an electronic disclosure regime?
    27. Do participants prefer receiving certain plan documents on 
paper rather than electronically (e.g., summary plan descriptions 
versus quarterly benefit statements), and what reasons are given for 
such preference? Would this preference change if participants were 
aware of the additional cost associated with paper disclosure?
    28. What impact would expanding electronic disclosure have on small 
plans? Are there unique costs or benefits for small plans? What special 
considerations, if any, are required for small plans?
    29. Is it more efficient to send an e-mail with the disclosure 
attached (e.g., as a PDF file) versus a link to a Web site? Which means 
of furnishing is more secure? Which means of furnishing would increase 
the likelihood that a worker will receive, read, retain and act upon 
the disclosure?
    30. Employee benefit plans often are subject to more than one 
applicable disclosure law (e.g., ERISA, Internal Revenue Code) and 
regulatory agency. To what extent would such employee benefit plans 
benefit from a single electronic disclosure standard?

    Signed at Washington, DC, this 1st day of April, 2011.
Phyllis C. Borzi,
Assistant Secretary, Employee Benefits Security Administration, 
Department of Labor.
[FR Doc. 2011-8288 Filed 4-6-11; 8:45 am]
BILLING CODE 4510-29-P