a-98-62.pdf

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PART IV - Items of General Interest
Request for Information - New Technologies in Retirement Plans
Announcement 98-62
The Internal Revenue Service and the Department of the
Treasury request comments from the public relating to the use of
new technologies (sometimes referred to as "paperless"
technologies) in the administration of retirement plans. The
Service and Treasury are in the process of developing guidance
relating to the use of new technologies in communications between
retirement plans and their participants. This announcement
solicits comments on a number of specific issues. However,
comments and suggestions from interested parties concerning other
issues pertinent to these technologies are also requested.
BACKGROUND
Section 1510 of the Taxpayer Relief Act of 1997 ("TRA ’97"),
Pub. L. 105-34, provides that the Secretary of the Treasury and
the Secretary of Labor each shall issue guidance designed to
interpret the notice, election, consent, disclosure, and time
requirements (and related recordkeeping requirements) under the
Internal Revenue Code of 1986 and the Employee Retirement Income
Security Act of 1974 relating to retirement plans as applied to
the use of new technologies by plan sponsors and administrators.
Section 1510 requires the guidance to maintain the protection of
the rights of participants and beneficiaries. Section 1510
further provides that the guidance shall clarify the extent to

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which writing requirements under the Internal Revenue Code of
1986 relating to retirement plans shall be interpreted to permit
paperless transactions.
SPECIFIC ISSUES FOR COMMENT
The Service invites interested parties to submit information
concerning the application of new or paperless technologies in
the administration of retirement plans and concerning any issues
that such technologies have presented for plan sponsors,
administrators, participants or beneficiaries. Specifically,
interested members of the public are invited to describe new
technologies that are commonly used in plan administration, and
to indicate the extent to which these technologies, and the
manner in which they are used, adequately protect the rights of
participants and beneficiaries. Commentators also are invited to
contrast characteristics and applications of technologies that
adequately protect the rights of participants and beneficiaries
with characteristics and applications that may not provide such
protection. The Service is particularly interested in receiving
specific comments regarding the paperless administration of
participant elections and consents, plan notices, plan loans, and
distributions.
In addition to the information requested above, comments are
specifically invited on the following questions:
!Would it be preferable for guidance to focus on
specific uses of existing technologies or to take the
form of generally applicable principles or standards?

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If commentators recommend that guidance take the form
of generally applicable principles or standards, it is
requested that the comments identify suggested
principles or standards as specifically as possible
(including any variations appropriate for different
technologies).
!To what extent, if any, do the terms "election" and
"consent" imply a writing or signature requirement?
!To what extent should paperless identification
mechanisms (for example, a Personal Identification
Number ("PIN") or password) be treated as satisfying a
legal requirement of a "writing" or a signature?
!Should the requirement to provide a notice during a
specified period (such as the requirement to provide a
§ 402(f) notice no less than 30 and no more than 90
days before the date of an eligible rollover
distribution) be deemed to be satisfied by providing a
written copy of a full notice on a less frequent basis
(for example, once a year) if participants or
beneficiaries, when initiating a transaction to which
the notice relates (such as requesting a distribution),
are given an oral or recorded summary of the notice and
told how to obtain a copy of the full notice?
!What are the appropriate standards for authentication,

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substantiation, and security in paperless plan
administration and record-keeping? For example, how
can it be established with a reasonable level of
confidence that a plan notice has actually been
received by a plan participant or beneficiary to whom
the notice has been transmitted in a paperless form?
Similarly, how can it be established that a particular
paperless transaction was entered into by a particular
participant? Also, how should records of paperless
transactions be maintained by plan sponsors or
administrators?
!What are the appropriate standards for ensuring that
participants and beneficiaries have sufficient time and
opportunity to consider (and, if desired, obtain advice
on) all relevant options when making significant
decisions about retirement savings? For example,
should participants and beneficiaries have the right to
review and change the content of any communication or
instructions transmitted in a paperless form before
completion of the transaction, and should they always
have the right to receive communications on paper as an
alternative to paperless communications?
!What types of new or paperless technologies do plan
sponsors and administrators foresee using in the
future? What practical and legal issues might arise
from the use of those technologies, and how might
systems using those technologies be designed to protect
the rights of participants and beneficiaries?

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!Which issues raised by the use of new technologies in
retirement plans are most in need of administrative
guidance?
Comments received to date indicate that the possible use of
electronic technologies in the administration of the spousal
consent requirements of §§ 401(a)(11) and 417 of the Code raises
a number of significant legal and practical issues relating to
adequate protection of persons who are not plan participants or
current or former employees. Consequently, initial guidance on
new technologies is unlikely to address issues involving spousal
consent. The public is nevertheless invited to submit comments
on this topic.
ADDRESS
Written comments should be submitted with a signed original
and eight (8) copies. All comments will be available for public
inspection and copying in their entirety. Comments should be
sent to CC:DOM:CORP:R (OGI-106555-98), Room 5226, Internal
Revenue Service, P.O. Box 7604, Ben Franklin Station, Washington,
D.C. 20044. Alternatively, comments may be hand delivered
between the hours of 8 a.m. and 5 p.m. to CC:DOM:CORP:R,
Courier's Desk, Internal Revenue Service, 1111 Constitution
Avenue, N.W., Washington, D.C., or may be submitted
electronically via the IRS Internet site at
http://www.irs.ustreas.gov/prod/tax_regs/comments.html
To ensure that comments are given full consideration, they should
be submitted by October 5, 1998.
DRAFTING INFORMATION
The principal authors of this announcement are Catherine

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Livingston Fernandez of the Office of the Associate Chief Counsel
(Employee Benefits and Exempt Organizations) and Daniel S. Evans
of the Employee Plans Division. For further information
regarding this announcement, contact the Employee Plans
Division’s telephone assistance service between 1:30 and 4:00
p.m., Eastern Time, Monday through Thursday at (202) 622-6074/75,
or Ms. Fernandez at (202) 622-6030. (These telephone numbers are
not toll-free).