Posted by Christopher Ciminera
In last week’s blog I drew a parallel between Verizon’s network coverage and communications of the retirement plan provisions through a Summary Plan Description (SPD) and Summary of Material Modifications (SMM). This week I will go into further detail on how to provide these communications electronically. The analogy to Verizon’s network coverage is still applicable since plan sponsors need to put themselves in the Verizon spokesman’s shoes and make sure that all necessary communications are received. Additionally, plan sponsors must include certain detail to let participants know the importance of the information and where additional information can be obtained. Unfortunately, there may be terminated employees with balances or beneficiaries that sometimes may be missed in these communications.
To start off, how can a plan sponsor ensure delivery? The old fashioned methods of hand delivering the SPD to a participant at work, mailing the SPD via 1st, 2nd, or 3rd class mail, or distributing the SPD with a company newsletter (or similar publication) are acceptable delivery methods. These methods can be compared to land lines, because there is a high probability that the communication will get through. However, more likely than not, participants have direct deposit and other forms of correspondence to employees have morphed into electronic communications. Similar to cell phone coverage, there can be holes in communication if a plan sponsor does not take necessary steps. When sending the SPD via email or posting it to the company intranet, the plan sponsor must send return receipt e-mails. Detail should include a statement on the significance of the document being referenced and the right to request a paper version of the document. When posting the SPD or SMM to the intranet, a plan sponsor may send an email containing a link or information which provides instructions on accessing the SPD. However, simply having the SPD available on the website without appropriate notification to the employees would not satisfy the disclosure obligations, since the plan sponsor has not notified participants of the location of the document and its importance.
One problem with just posting the SPD to the intranet and even emailing the link to employees is that there could possibly be terminated participants with balances or beneficiaries who don’t work for the company or don’t have access to the electronic communication. Terminated employees or beneficiaries must consent to electronic disclosures or elect non-electronic delivery. Prior to consenting, the individual must be provided a statement that includes:
- the types of documents to which the consent applies;
- notification that consent can be withdrawn at any time;
- the procedures for withdrawing consent and updating relevant information;
- the right to request and obtain a paper version of an electronically furnished document; and
- any hardware or software requirements for accessing and retaining the documents.
Like Verizon sending its spokesman across the world to show that its coverage is the best, plan sponsors who distribute SPDs and SMMs electronically to participants and beneficiaries must show that they have communicated the importance and location of these documents.