The Department of Labor (DOL), in coordination with the Treasury Department and Internal Revenue Service (IRS), issued guidance providing deadline relief for employee benefit plans and plan participants. The relief was issued in two separate notices: (1) a notice issued solely by the DOL (DOL Notice) announcing an extension of deadlines for furnishing notices and disclosures to plan participants, beneficiaries and other persons so that plan fiduciaries and plan sponsors have additional time to meet their obligations during the COVID-19 outbreak under the Employee Retirement Income Security Act of 1974, as amended (ERISA); and (2) a notice issued jointly with the DOL and Treasury Department/IRS (Joint Notice) to provide additional time to comply with deadlines affecting group health, disability, retirement and other plans. Both notices provide relief for deadlines occurring from March 1, 2020 (the beginning of the COVID-19 national emergency declared by the President), until 60 days after the announced end of the COVID-19 national emergency (Outbreak Period).
Extension for Furnishing ERISA Required Notices, Disclosures and Documents
Under this relief, the failure of an employee benefit plan and the responsible fiduciaries to furnish notices, disclosures and documents required to be distributed under ERISA during the Outbreak Period will not be a violation of ERISA, provided the plan and responsible fiduciary act in good faith and furnish the notice as soon as administratively practicable under the circumstances.
The DOL Notice expands good-faith acts to include use of electronic alternative means of communication to those participants and beneficiaries that the plan fiduciary reasonably believes have effective access to electronic means of communication, including email, text messages and continuous access websites.
Plan Loans and Distributions
A failure to follow the plan’s procedural requirements for plan loans or distributions during the Outbreak Period will not be treated as a failure if:
- The failure is solely attributable to the COVID-19 outbreak.
- The plan administrator makes a good-faith diligent effort under the circumstances to comply with the requirements.
- The plan administrator makes a reasonable attempt to correct any procedural deficiencies, such as assembling missing documentation, as soon as administratively practicable.
This relief for verification procedures under the plan’s terms is limited to verification requirements required by ERISA and within the interpretive authority of the DOL; it does not include statutory or regulatory requirements, such as spousal consent, under the jurisdiction of the Treasury Department/IRS.
Coronavirus-Related Plan Loans
For coronavirus-related plan loans issued during the loan relief period beginning on March 27, 2020, and ending on September 22, 2020, the DOL will not treat any person as having violated ERISA’s participant loan requirements, including the requirements that such loans be adequately secured and available to all participants on a reasonably equivalent basis, solely because:
- A “qualified individual” received a plan loan in compliance with the Coronavirus Aid, Relief and Economic Security Act (CARES Act) and related IRS guidance.
- A “qualified individual” delayed making loan repayments as permitted under the CARES Act and related IRS guidance.
Certain Plan Amendments Related to COVID-19 Outbreak
If a retirement plan is amended to provide coronavirus-related distributions and coronavirus-related plan loans in accordance with the CARES Act, and the amendment is adopted on or before the last day of the first plan year beginning on or after January 1, 2022 (by December 31, 2022, for calendar year plans), the plan is deemed to have operated in accordance with the amendment prior to its formal adoption.
Participant Contributions and Loan Repayments
Under ERISA, amounts withheld from participants’ wages as employee 401(k) contributions (both pre-tax elective deferrals and after-tax Roth contributions) or for repayment of a loan to a 401(k) plan are plan assets. To avoid engaging in a prohibited transaction, these amounts generally must be forwarded to the 401(k) plan on the earliest date that such amounts can reasonably be segregated from the employer’s general assets.
Due to the COVID-19 pandemic, the DOL recognizes that some employers and service providers may not be able to timely forward participant contributions and loan repayments to the plan. Accordingly, the DOL will not take enforcement action during the Outbreak Period with respect to a temporary delay in forwarding such amounts to the plan, provided the delay is solely attributable to the COVID-19 outbreak. Employers and service providers must comply as soon as administratively practicable under the circumstances, however.
Generally, participants in an individual account plan must be provided with 30 days’ advance notice of any temporary suspension, limitation or restriction by a blackout period lasting three or more consecutive days. The existing regulations include an exception when the inability to provide the notice is due to circumstances beyond the reasonable control of the plan administrator and the fiduciary documents its determination in writing. The DOL Notice waives, during the Outbreak Period, the (1) blackout notice requirement, including those required to be provided after the blackout period, and (2) written determination requirement for fiduciaries.
Annual Funding Notice for Defined Benefit Plans
An annual funding notice (AFN) is required for all defined benefit plans (not defined contribution plans, like 401(k) or 403(b) plans) subject to ERISA. The AFN must be provided no later than 120 days after the end of each plan year. For pension plans with a calendar plan year, the 2020 deadline is April 29, 2020 (due to the leap year). Although the DOL Notice does not specifically mention a waiver of the deadline for providing the AFN, the DOL Notice’s deadline extension should apply because the deadline for furnishing the AFN occurs during the Outbreak Period. The AFN still must be provided, but the timing is delayed until as soon as administratively practicable under the circumstances.
General ERISA Fiduciary Compliance Guidance
Plan fiduciaries should make reasonable accommodations to prevent the loss of benefits or the undue delay in benefit payments and attempt to minimize the possibility of individuals losing benefits because of the failure to comply with pre-established timeframes. The DOL’s enforcement approach will emphasize compliance assistance and include grace periods and other relief where appropriate.
To the extent there are different Outbreak Period end dates for different parts of the country, the DOL will issue additional guidance regarding the application of the relief in this DOL Notice.
Joint DOL and Treasury Department/IRS Notice
The Joint Notice provides extensions of certain timeframes under ERISA and the Internal Revenue Code during the Outbreak Period for group health plans, disability and other welfare plans, pension plans, and participants and beneficiaries of these plans. This relief will be effective immediately upon publication of the Joint Notice in the Federal Register (scheduled to be published on Monday, May 4, 2020). This Joint Notice supplements other guidance issued by the DOL and IRS.
Relief for Plan Participants Beneficiaries, Qualified Beneficiaries and Claimants
HIPAA Special Enrollment Timeframes
The 30-day period (or 60-day period if applicable) to request special enrollment is disregarded during the Outbreak Period.
The following COBRA deadlines are disregarded during the Outbreak Period:
- The 60-day election period for continuation of coverage.
- The date for making COBRA premium payments.
- The date for individuals to notify the plan of a qualifying event or determination of disability.
Claims Procedure Deadlines
The following claims procedure deadlines are disregarded during the Outbreak Period:
- The date within which individuals may file a benefit claim.
- The date within which claimants may file an appeal.
- The date within which claimants may file a request for external review.
- The date within which claimants may file information to perfect a request for external review.
Relief for Group Health Plans
The Outbreak Period is disregarded when determining the date for providing a COBRA election notice.
Later Extensions Possible
The DOL, Department of Treasury and IRS will continue to monitor the effects of the COVID‑19 pandemic and may provide additional relief as warranted. To the extent there are different Outbreak Period end dates for different parts of the country, the agencies will issue additional guidance regarding the application of the relief in this Joint Notice.
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