Proposed Regulations on the Use of Electronic
Communication and Recordkeeping for ERISA Plans
The Internal Revenue Service (IRS) issued proposed rules under the Employee
Retirement Income Security Act of 1974, as amended (ERISA), concerning the
disclosure of certain employee benefit plan information through electronic
media and standards for the maintenance and retention of employee benefit plan
records in electronic form.
The proposal would establish a safe harbor pursuant to which all pension and
welfare benefit plans covered by Title I of ERISA may satisfy their obligations
to furnish summary plan descriptions, summaries of material modifications,
updated summary plan descriptions, and summary annual reports using electronic
media. With respect to recordkeeping, the proposal would provide standards
concerning the use of electronic media, including electronic storage and
automatic data processing systems for the maintenance and retention of records.
In the absence of final regulations or other guidance, good faith compliance
with the proposed regulations will constitute compliance.
The proposed regulations establish a safe harbor on which plan
administrators may rely in delivering plan disclosures through electronic
media, but is not intended to represent the exclusive means by which the
requirements may be satisfied.
Some of the key points of the proposed regulations require Plan
Administrators to:
Ensure that the system for furnishing documents results in actual receipt
by participants of transmitted information, such as through the use of a
return-receipt electronic mail feature
Notify each participant through electronic means or in writing of the
significance of the electronically disclosed
Notify each participant of the participant's right to request and receive,
free of charge, a paper copy of each such document from the plan administrator.
Deliver information electronically that is equivalent in both substance and
form to the disclosure information the participants would have received had
they been furnished the information in paper form.
Provide participants the opportunity to convert furnished documents from
electronic form to paper form, at the company worksite, free of charge.
The maintenance and retention of records requirements will be satisfied when
using electronic media if:
The electronic recordkeeping system has reasonable controls to ensure the
integrity, accuracy, authenticity, and reliability of the records kept in
electronic form.
The electronic records are maintained in reasonable order and in a safe and
accessible place, and in such manner as they may be readily inspected or
examined (for example. the recordkeeping system should be capable of indexing,
retaining, preserving, retrieving and reproducing the electronic records).
The electronic records are readily convertible into legible and readable
paper copy as may be needed to satisfy reporting and disclosure requirements.
The electronic recordkeeping system does not compromise or limit a person's
ability to comply with any reporting and disclosure requirement.
Adequate records management practices are established and implemented (for
example. following procedures for labeling of electronically maintained or
retained records, providing a secure storage environment, creating back-up
electronic copies and selecting an off-site storage location, observing a
quality assurance program evidenced by regular evaluations of the electronic
recordkeeping system, including periodic checks of electronically maintained or
retained records, and retaining paper copies of records that cannot be clearly,
accurately or completely transferred to an electronic recordkeeping system).
All electronic records must exhibit a high degree of legibility and
readability when displayed on a video display terminal and when reproduced in
paper form.
Original paper records may be disposed of any time after they are
transferred to an electronic recordkeeping system that complies with the
requirements of this section, except for original records that have legal
significance or inherent value as original records (for example, notarized
documents, insurance contracts, stock certificates, and documents executed
under seal).
