Cybersecurity and DOL Document Requests

ERISA consultants at the Retirement Learning Center (RLC) Resource Desk regularly receive calls from financial advisors on a broad array of technical topics related to IRAs, qualified retirement plans and other types of retirement savings and income plans, including nonqualified plans, stock options, and Social Security and Medicare.  We bring Case of the Week to you to highlight the most relevant topics affecting your business.  

A recent call with an advisor in Texas is representative of a common question on cybersecurity and retirement plans. An advisor asked: “I understand the Department of Labor (DOL) is already checking the cybersecurity procedures of plans that are currently under audit.  Do you have any insight into what the DOL’s auditors are requesting from plan sponsors with respect to cybersecurity?”

Highlights of the Discussion 

Yes, the DOL’s “Cybersecurity Document Requests” that we have seen, which have been given to at least some plans under audit, reveal the DOL has been asking for quite an extensive list of documentation, as represented below.  Moreover, the DOL has noted that plan administrators should be aware that they may need to consult not only with the sponsor of the plan, but with the service providers of the plan to obtain all the documents requested, and if they are unable to produce the requested documents the plan administrator must specify the reasons why the documents are unavailable.

1. All policies, procedures, or guidelines relating to 

• Data governance, classification and disposal. 

• The implementation of access controls and identity management, including any use of multi-factor authentication. 

• The processes for business continuity, disaster recovery, and incident response. 

• The assessment of security risks. 

• Data privacy. 

• Management of vendors and third-party service providers, including notification protocols for cybersecurity events and the use of data for any purpose other than the direct performance of their duties. 

• Cybersecurity awareness training. 

• Encryption to protect all sensitive information transmitted, stored, or in transit. 

2. All documents and communications relating to any past cybersecurity incidents. 

3. All security risk assessment reports. 

4. All security control audit reports, audit files, penetration test reports and supporting documents, and any other third-party cybersecurity analyses. 

5. All documents and communications describing security reviews and independent security assessments of the assets or data of the plan stored in a cloud or managed by service providers. 

6. All documents describing any secure system development life cycle (SDLC) program, including penetration testing, code review, and architecture analysis. 

7. All documents describing security technical controls, including firewalls, antivirus software, and data backup. 

8. All documents and communications from service providers relating to their cybersecurity capabilities and procedures. 

9. All documents and communications from service providers regarding policies and procedures for collecting, storing, archiving, deleting, anonymizing, warehousing, and sharing data. 

10. All documents and communications describing the permitted uses of data by the sponsor of the Plan or by any service providers of the Plan, including, but not limited to, all uses of data for the direct or indirect purpose of cross-selling or marketing products and services. 

Most recently, the DOL on April 14, 2021, issued three cybersecurity directives nationwide for retirement plans:  

• Tips for Hiring a Service Provider: This piece helps plan sponsors and fiduciaries prudently select a service provider with strong cybersecurity practices and monitor their activities, as ERISA requires. 

• Cybersecurity Program Best Practices: This piece assists plan fiduciaries and record-keepers in their responsibilities to manage cybersecurity risks by following these steps. 

• Online Security Tips: This piece offers plan participants and beneficiaries who check their accounts online basic rules to reduce the risk of fraud or loss. 

For more details, please see RLC’s previous Case of the Week: Cybersecurity and Retirement Plans-What's the Latest?

Conclusion

The industry is still waiting for definitive cybersecurity rules for retirement plan administration. In the meantime, the best that concerned parties can do is make a good faith effort to adopt cybersecurity policies, following the series of guidelines, suggestions and best practices issued by the DOL, and document, document, document.