NU Online News Service, Aug. 21, 6:15 p.m. – The Internal Revenue Service has issued final regulations that let employers notify employees and other parties about proposed changes to retirement plans through electronic mail.
The regulations, described in Treasury Decision 9006, update Section 7476(b)(2) of the Internal Revenue Code, which deals with “advance determinations.”
Employers ask for advance determinations from the IRS when they make major changes to retirement plans, or the IRS makes major changes in the regulations governing the plans, to make sure that the plans still qualify for the tax breaks normally available to retirement plans.
An employer has to send notices to all employees, former employees, beneficiaries and other interested parties to let them know about the application for the advance determination and inform them of their legal rights.
Whether employers could send a notice through electronic mail was unclear under the old rules.
Under the new rules, “the notice may be provided by any method reasonably calculated to ensure that each interested party is notified,” according to the regulation text.
Employers can now use electronic mail to notify employees who have “reasonable access to computers” at work.
Employers can also use electronic mail to notify other parties, such as union representatives, if they have those representatives?f e-mail addresses.
But employers still have to use worksite bulletin boards, regular mail and other methods to reach workers who lack access to e-mail and parties whose e-mail addresses are unavailable, the IRS says.
Regulators at the IRS and the U.S. Treasury Department officially released a draft of the regulation update in January 2001.
Employers have been free to send out electronic notices after since the draft came out, according to Debra Hinshaw, a lawyer with Baker & Daniels, Indianapolis.
But the final regulations took full effect July 19, and they will officially start applying to applications for advance determinations filed after Jan. 1, 2003, the IRS says.
One change made to the first draft of the regulations involves the timing of notices.
Originally, the IRS was going to ask employers to send e-mail notices between seven and 21 days before the application filing date, and to send notices delivered through regular mail between 10 and 24 days before the application filing date.
“In the interest of simplification, the final regulations provide a single time period for providing the notice,” the IRS says.
Employers should now send notices of all types between 10 and 24 days before the application date, the IRS says.
More information about the final regulations is available in Internal Revenue Bulletin 2002-32, which is posted on the Web at http://frwebgate.access.gpo.gov/cgi-bin/getdoc.cgi?dbname=2001_register&docid=01-131-filed.pdf