Feds Unveil Electronic Benefits Data Transmission

July 14, 2005 (PLANSPONSOR.com) - Federal officials have released proposed regulations dealing with how employers can properly use electronic media to provide employee and beneficiary notice and information about their benefit plans.

A news release from the US Treasury Department and the Internal Revenue Service (IRS) said the procedures would also govern how employers transmitted elections and consents from participants and beneficiaries to benefit plans. According to the announcement, the proposed regulations also reflect the effects of the Electronic Signatures in Global and National Commerce Act (E-SIGN).

The proposal allows employers to rely on electronic media either under the E-SIGN consumer consent rules or under an alternative that is similar to the retirement plan rules for electronic transmission of plan information that were in effect  before E-SIGN and that are both less burdensome on employers and at least as protective for participants.

According to the regulations, before information can be transmitted electronically, a consumer must first affirmatively consent to receiving the information

electronically and the consent must be made in a manner that reasonably demonstrates the consumer’s ability to access the information in electronic form (or if the consent is not provided in such a manner, that confirmation of the consent be made electronically in a manner that reasonably demonstrates the consumer’s ability to access the information in electronic form), the federal officials said in the news release.

Before giving that consent, the consumer must receive:

  • certain specified disclosures including the hardware or software requirements for access to and retention of the electronic records
  • the consumer’s right to withdraw his or her consent to receive the information electronically (and the consequences that follow the withdrawal of consent)
  • the procedures for requesting a paper copy of the electronic record, and the cost, if any, of obtaining a paper copy.

The regulations would not go into effect until after they are adopted  as final regulations.  The regulations are  here