The Department of Labor (DOL), joined and coordinated in part by the Department of Treasury, Internal Revenue Service, and Department of Health and Human Services, has released several documents providing deadline extensions for employee benefit plans during the COVID-19 disaster period and enforcement relief with respect to certain compliance requirements. The changes were described generally in a DOL news release, and more formal guidance was set forth in new final regulations and EBSA Disaster Relief Notice 2020-01. The DOL also issued informal advice in the form of FAQs to participants and beneficiaries.

Duration of the Extensions

Generally, the extension periods and other relief apply during the “outbreak period,” which is the period beginning March 1, 2020, and ending 60 days after the announced end of the national emergency concerning the COVID-19 outbreak.

Affected Plans, Periods, and Dates

The affected plans and periods and dates subject to the extensions are summarized below. Under the guidance, the outbreak period is disregarded for the purposes of determining each of these periods or dates. In other words, the applicable periods or dates are tolled during the outbreak period and will not begin or resume until the outbreak period ends. 

* It is important to note that this extension will only apply if the plan and the responsible fiduciary act in good faith and furnish the required notice, disclosure, or documents “as soon as administratively practicable under the circumstances.” For this purpose, a good faith act includes using electronic alternative means of communication – such as through email, text messages, or website postings – with participants and beneficiaries who the plan fiduciary reasonably believes have effective access to such communication. As such, plan fiduciaries of plans not already providing such documents to plan participants and beneficiaries via electronic means (subject to the DOL safe harbor rules applicable to such communications) should immediately examine what alternatives exist to begin such distribution and, just as importantly, document both the examination and any electronic communications made.

Other Relief

• General ERISA Fiduciary Compliance - The DOL acknowledged that there may be instances when plans and service providers are unable to achieve full and timely compliance with claims processing and other ERISA requirements. The DOL stated that its approach to enforcement will emphasize compliance assistance and include grace periods and other relief where appropriate, including when physical disruption to a plan or service provider’s principal place of business makes compliance with pre-established timeframes for certain claim decisions or disclosures impossible. Again, plan fiduciaries should document both the extent of any disruption and the efforts made to carry out fiduciary duties during any such disruption.

The following relief applies to all employee pension benefit plans (including both defined benefit plans and defined contributions plans) subject to ERISA:

• Verification Procedures for Plan Loans and Distributions - The DOL will not treat a plan administrator’s failure to follow procedural requirements for plan loans or distributions under the terms of the plan 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 those requirements; and the plan administrator makes a reasonable attempt to correct any procedural deficiencies, such as assembling any missing documentation, as soon as administratively practicable. The relief only applies to verification procedures imposed by the terms of the plan that are required under ERISA and are within the sole jurisdiction of the DOL. For instance, the relief does not apply to spousal consent requirements or other requirements within the jurisdiction of the IRS.

• Plan Loans under the CARES Act - The DOL will not treat any person as having violated the prohibited transaction rules under ERISA by reason of providing a plan loan or delaying loan repayments in compliance with provisions of the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) and related guidance.

• CARES Act Amendments - The DOL will treat a plan that is retroactively amended to implement the expanded distribution and/or loan provisions under the CARES Act as having been operated in accordance with the terms of the plan if the plan is timely amended in accordance with the CARES Act (generally, the last day of the 2022 plan year).

• Participant Contributions and Loan Repayments - The DOL will not, solely on the basis of a failure attributable to the COVID‑19 outbreak, take enforcement action with respect to a temporary delay in forwarding participant contributions or loan repayments to a plan. Employers and service providers must still act reasonably, prudently, and in the interest of employees to comply as soon as administratively practicable under the circumstances.

• Blackout Notices - The DOL will consider the exception to the advance notice requirement for providing blackout notices in DOL regulations to apply when a plan administrator is unable to provide advance notice due to the COVID-19 pandemic. Also, the requirement under the DOL regulations that the plan administrator document its inability to satisfy the advance notice requirement will not be enforced. 

• Form 5500 and Form M-1 - The DOL noted that, in accordance with guidance published on the IRS COVID-19 emergency website, Form 5500 filing relief is being provided. It further notes that Form M-1 filings required for multiple employer welfare arrangements (MEWAs) and certain entities claiming exception (ECEs) are provided relief for the same period of time as the Form 5500 filing relief.

Other Informal Guidance

In the FAQs, the DOL answers a number of questions about health and retirement benefits for participants, beneficiaries, plan sponsors, and employers affected by the COVID-19 outbreak.