How to meet IRS rules on electronic distribution of the plan document SPD

Employers may stop printing and mailing hard copy versions of the participant package for group benefit plans once they know how to meet IRS rules on electronic distribution of the plan document SPD.

IRS rules

When Section 125 Premium Only Plans and related tax-saving benefit plans were created in the late 1970s, there was no question as to how the Summary Plan Description and associated election forms would be distributed to employees. The employer would make copies, printed on paper, and then give them to every eligible plan participant. Today, however, many employers would like to save all that paper. Employees, too, would prefer to access the documents online and complete the needed actions by keystroke rather than a pen. What does the IRS have to say about electronic distribution of the plan document SPD?

To find the answer, we go to 29 CFR 2520.104b-1 – Disclosure, and then scroll down to (c) Disclosure through electronic media. The basic rules governing electronic distribution of the plan document SPD follow.

Employee eligibility for electronic distribution of the plan document SPD

1. Employers may electronically distribute the SPD to employees with the ability to access the electronic media where they perform their job duties. In other words, they use a computer with internet access in their daily work.
2. When employees do not use a computer to perform their duties and thereby lack the ability to access electronic media at their workstation (including retirees and beneficiaries), the participant must sign a written consent form before the employer can send electronically distribute the SPD to them. This consent form must tell the participant that consent can be withdrawn at any time and provide the procedures for withdrawing along with current contact information to do so. The form must also tell them what hardware and software (app) is needed to view, access, and save the SPD and related documents.

Employer requirements for electronic distribution of the plan document SPD

The employer must ensure that the electronic delivery system used for the SPD:

• Provides a document that is the same in style and format as the paper SPD.
• Lets employees know that the document is being distributed via electronic media, why it is vital to the employee to access it, and that a paper copy of the SPD will be supplied upon request.
• Gives the employer proof that the employee has received and accessed the document (using a return receipt system).
• Protects all confidential information submitted by the employee/participant.

Also, the delivery system must:

• Result in actual receipt of the document (e.g., using return receipt notices).
• Protect the confidentiality of any personal information.
• Use the same style and format as the paper document.
• Provide notice, when the document is distributed, of why it’s important and saying that the participant can ask for a free paper copy of the SPD.

Apples and oranges?

Comparing the cost of paper, ink, envelopes, and postage to mail a multi-page SPD to a participant’s home to the development of tools and systems for electronic distribution of the plan document SPD is not as straightforward as we would like, so specific advice to any particular employer is not available. A lot depends on the employer’s situation, employee access to a computer with internet access and more.

What we can tell you that is that every employer must have a plan document in place, and the ERISA Wrap SPD, before their Section 125 POP, HSA, FSA, HRA, or any other tax-saving benefit plan can be offered to employees, with the SPD distributed prior to the start of each plan year.

• If your company doesn’t have the documents needed to comply with IRS, DOL, and ACA regulations, contact us today.

For more information on popular tax-saving plan benefit plans, download these brochures:

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