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Regulation and Compliance > Federal Regulation

IRS Proposes Electronic Benefits Communication Regulations

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The Internal Revenue Service has released a draft of regulations that could set clear-cut rules for employers and benefit plan administrators that want to communicate through electronic mail.[@@]

In 1999 and 2000, the IRS released regulations that set rules for sending certain kinds of retirement plan notices through electronic media. The IRS required that electronic notices be about as easy for participants to understand as paper documents. Retirement plan sponsors also had to give participants a chance to continue to receive notices on paper.

The proposed regulations would establish similar standards for access and clarity to notices for many different types of benefit plans, including health plans, health savings accounts, educational assistance plans, cafeteria plans and transportation plans as well as retirement plans.

The regulations would not apply to COBRA health benefits continuation notices and other notices that are required by the Employee Retirement Income Security Act of 1974 and are regulated by the U.S. Department of Labor or the Pension Benefit Guaranty Corp., IRS officials write in a preamble accompanying the proposed regulations.

One key provision would require that the electronic notice be about as clear as a comparable written notice.

“For example,” officials write, “a plan delivering a lengthy [retirement plan rollover distribution notice] would not satisfy this requirement if the plan chose to provide the notice through a pre-recorded message on an automated phone system.”

The officials also talk about how to get notarized signatures from spouses. A spouse may be able to provide signatures electronically, but the IRS is wondering whether it should continue to require that the spouse appear in the same location that the notary is in, officials write.

The U.S. Treasury Department, the department that oversees the IRS, has posted the proposed regulations at //


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