The DOL Transitions to Paperless Checks 

The Department of Labor will no longer issue or accept paper checks effective September 30, according to a notice published in the Federal Register. 

The DOL stated that the action follows a March executive order by President Donald Trump that mandated federal agencies to transition to electronic funds transfer and actively enroll recipients in digital payment methods. 

A plan sponsor may need to distribute funds to the DOL under section 502(l) of ERISA when facing a penalty in the case of certain settlements or court orders where the DOL is involved, says Andrew Oringer, a partner at Wagner Law Group. Other limited circumstances where plan sponsors would send funds to the DOL include paying penalties for missing required filings or for failing to provide requested information/documentation to participants. 

Earlier this month, the Social Security Administration also went paperless. 

According to the agency, the electronic payment approach will save money since each paper check costs the DOL about 50 cents, whereas each electronic funds transfer costs less than 15 cents, and funds are more quickly transferred. 

Transitioning to fully electronic payments also protects against fraud, according to the agency, since “paper checks are 16 times more likely to be lost or stolen compared to electronic payments.”  

The SSA similarly cited the same cost saving, efficiency improvements and fraud protection benefits in its announcement to transition to fully electronic payments earlier this year.