The proposal will likely be released in a matter of weeks. (Photo:Mike Scarcella/ALM)

The Labor Department has sent a proposed rule for electronicdisclosures to participants in 401(k) plans to the White House’sOffice of Management and Budget.

The proposal, titled “Improving Effectiveness of and Reducingthe Cost of Furnishing Required Notices and Disclosures,” is theresult of President Trump’s 2018 executive order, “StrengtheningRetirement Security in America.”

Under the order, Labor was instructed to review whether ERISA’sretirement plan disclosure requirements, fashioned in 1986, shouldbe updated to make the documents more understandable for planparticipants, while reducing cost burdens on employers and otherplan fiduciaries.

“This review shall include an exploration of the potential forbroader use of electronic delivery as a way to improve theeffectiveness of disclosures and to reduce their associated costsand burdens,” the White Houses executive order said.

OMB typically takes 30 days or less to review a proposal—it wasdelivered to the White House on August 16. If it satisfies OMB’spolicy and cost review, the proposal will be released to thepublic.

“It’s significant in that it’s the last step before a proposedrule gets published,” said Kevin Walsh, a partner with The GroomLaw Group. “It signals DOL has finished its work on it.”

In 2011, the Labor Department issued a technical releaseclarifying a safe harbor provision on the electronic delivery ofplan documents. Under the safe harbor, documents can beelectronically delivered as long as participants consent toreceiving the information digitally and those participants haveaccess to a computer as part of their core workresponsibilities.

That guidance was seen as overly restrictive by industryadvocates. In a 2011 comment letter to Labor, The SPARK Institutecited two of its sponsor members that claimed only 25 percent oftheir participants had elected to receive plan informationelectronically.

Exactly how the proposal addresses the existing safe harborrestrictions won’t be known until the proposal is released, saidWalsh.

The proposal is listed as “economically significant,” meaning itis likely to have an annual impact on the economy of $100 millionor more.

Walsh said a public comment period on the proposal can beexpected.

“There will be plenty of time for DOL to finalize a rule beforeany possible change in administration in the next election,” hesaid.

“This is low-hanging fruit,” added Walsh. “The DOL’s disclosurerules were written for an era where the presumption was peopledidn’t have access to computers. It’s an area where it’s reasonableto ask what has taken so long for DOL to update the rules.”