NEW YORK (Reuters) - Companies that serve 401(k) plans are asking the Labor Department to reconsider its stance on mailed notification, so that they can save costs by using email instead of regular mail to send information to plan participants.

If the agency does not change its position, employees in 401 (k) plans will have to bear the additional mailing costs that can be substantial for plan participants, according to the March 27 letter from 15 industry trade groups.

"Presently, the increased costs attendant to paper disclosure in 401(k) plans could reduce participants' retirement savings, the very savings we are working to increase with enhanced transparency," the groups wrote in the letter.

Some record keepers estimate that the costs of paper-based statements could be $2 to $3 per employee, which would mean tens of thousands of dollars in added expenses for large employers, said Samuel Brandwein, a Morgan Stanley Smith Barney adviser who works with retirement plans.

"The purpose of the fee disclosure rules was to drive down costs for 401(k) plan participants," Brandwein said. "This could have the unintended consequence of driving up those costs."

Under Labor Department rules, employers who send materials through regular mail are safe from reprimand from the agency. But those who use email do not have such protection and could face potential lawsuits without a paper trail record.

This issue has been a thorn in the side of the retirement plan industry for years. It will become a much bigger issue this summer, when 401(k) plan providers will have to start disclosing the fees they charge to employees in these plans.

"With the new fee disclosure regulations, plan participants are going to get a lot more volume of materials," said Judy Miller, director of retirement policy for the American Society of Pension Professionals and Actuaries, one of the 15 groups that sent the letter to the Labor Department.

"This issue has really taken on new importance."

Other groups that joined with ASPPA in the letter include the Investment Company Institute, the American Bankers Association and the U.S. Chamber of Commerce.

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Retirement providers push for email for cost savings