Benefits & ERISA Law

Electronic Copies for Nothin? and Your Paper Copies Are Free

By Suzanne Wynn

As more offices go green and provide information electronically, a growing question is whether you can charge participants and beneficiaries for paper copies. There are two theories for charging participants and beneficiaries for paper copies. The first theory is that trees will be saved because participants and beneficiaries will not want to pay for paper copies when they can have the electronic version of the same information for free. The second theory is that participants and beneficiaries should pay for paper copies because it takes more resources to provide paper copies than it does to provide electronic copies so those costs should be paid for by the specific participants and beneficiares which are causing the plan to incur those costs.

Both theories are wrong according to the Treasury regulations and the Labor regulations. Treas. Reg. 1.401(a)-21(c)(3) permits notices to be provided electronically to participants and beneficiaries as long as they are advised that they may request and receive the notice in writing on paper at no charge. Once participants and beneficiaries make that request, they must be provided a paper copy of the notice for free.

Labor Reg. 2520.104b-1(c)(1)(iv) provides that participants and beneficiaries can be provided documents through electronic means as long as they are furnished a paper version upon request. Labor Reg. 2520.104b-1(c)(2)(ii)(C)(4) is not specific on whether participants and beneficiaries can be charged for that paper copy. It states that prior to consenting to receive documents electronically, participants and beneficiaries must be provided a clear and concise statement indicating their right to request a paper version of the electronically furnished document, and whether the paper version will be provided free of charge.

The Labor Regs do permit plan administrators to impose a reasonable charge for providing certain plan documents, and specifically define how much reasonable is. The plan administrator can charge participants and beneficiaries for copies of:

1. the latest updated summary plan description;
2. the latest annual report;
3. any terminal report;
4. the bargaining agreement;
5. trust agreement; and
6. contract or other instruments under which the plan is established or operated.

No charge is permitted for furnishing information, statements or documents as required by other provisions of the Act, which include, in Part 1 of Title I, sections 104(b)(1), (2), (3) and (c) and 105(a) and (c).

Labor Reg. 2520.104b-30 defines a reasonable charge as equaling the actual cost per page to the plan for the least expensive means of acceptable reproduction, but in no event may such charge exceed 25 cents per page. This is the reason that most summary plan descriptions contain a sentence or two that copies will be provided for “a reasonable charge” or that copies will be provided by the plan administrator for no more than 25 cents per page. If the summary plan description states that copies will be provided for free, than the plan administrator must abide by those statements and not charge for copies.

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Full post as published by Pension Protection Act Blog on July 29, 2008 (boomark / email).