The U.S. Department of Labor’s Employee Benefits Security Administration and the IRS recently issued the following coordinated guidance providing additional relief to employee benefit plan sponsors, fiduciaries, participants, and beneficiaries navigating the challenges of complying with administrative requirements and deadlines under ERISA as a result of the COVID-19 outbreak and quarantine measures:
Notice 2020-01 and the Joint Notice are summarized below.
Extension of Certain ERISA TITLE I Deadlines
Notice 2020-01 extends the deadlines that apply to certain notices, disclosures, and documents that must be furnished under Title I of ERISA during the COVID-19 outbreak. The extension is subject to the limitation under ERISA §518 that authorizes the DOL to disregard periods up to one year in determining the deadline for actions required to be taken under an employee benefit plan in the event of a Presidentially declared disaster or public health emergency.
During the period from March 1, 2020 (the effective date of the Presidentially declared COVID-19 national emergency (“National Emergency”)) through the 60th day after the end of the National Emergency is declared or such other date as the agencies may announce (the “Outbreak Period”), an employee benefit plan and the responsible plan fiduciary will not be in violation of ERISA if action is taken in good faith to furnish a notice, disclosure, or document as soon as administratively practicable under the circumstances.
Good faith acts include the use of electronic alternative means of communicating with plan participants and beneficiaries who the plan fiduciary reasonably believes have effective access to electronic means of communication, including email, text messages, and continuous access websites. The relief applies to plan disclosures such as summary plan descriptions, summaries of material modifications, summary annual reports, annual funding notices, qualified default investment alternative notices, and periodic pension benefit statements that are due anytime during the Outbreak Period.
The DOL will issue additional guidance if different Outbreak Period end dates apply for different parts of the US.
Clarification of Form 5500 Filing Due Date Extensions
Notice 2020-01 confirms that the DOL has not yet extended the Form 5500 Annual Report due date of July 31, 2020 (subject to extension) for 2019 calendar year plans. (Previously issued COVID-19 emergency relief, IRS Notice 2020-23, extended the Form 5500 filing deadline to July 14, 2020, for plans whose filing deadline otherwise occurs during the period of April 1, 2020, to July 14, 2020.)
Extension of Blackout Notices
Under Notice 2020-01, any notices with respect to a blackout period for an individual account plan that are due during the Outbreak Period will not be subject to an ERISA violation if the plan and responsible fiduciary act in good faith and furnish the notice as soon as administratively practicable under the circumstances. Further, where the plan administrator was unable to provide the 30 days’ advance notice of a blackout period under 29 CFR 2520.101-3 due to the pandemic, the DOL will not require the plan fiduciary to make a written determination that the delay was caused by events beyond the plan administrator’s reasonable control.
Relief for Plan Loan Administration
Certain Plan Amendments Related to the COVID-19 Outbreak
Notice 2020-01 provides that, if a qualified retirement plan is amended to provide for the increased loan amounts or coronavirus-related distributions made available under the CARES Act (see our separate CARES Act Alert, here), the DOL will treat the plan as being operated in accordance with the terms of such amendment prior to its adoption if (1) the amendment is (i) made on or before the last day of the first plan year beginning on or after January 1, 2022 (or such later date prescribed by the Secretary of the Treasury), and (ii) made retroactive to March 27, 2020, and (2) the plan is operated in full compliance with the CARES Act provisions (Section 2202) governing the new loan relief and coronavirus-related distributions during this period.
Delays in Depositing Plan Assets from Participant Contributions and Loan Repayments
A participant’s salary contributions and loan repayments made from payroll deductions are considered qualified retirement plan assets under ERISA. Generally, these funds must be forwarded to the plan on the earliest date on which such amounts can reasonably be segregated from the employer’s general assets (but in no event later than the 15th business day of the month following the month in which the amounts were paid to or withheld by the employer).
Under Notice 2020-01, the DOL will not take enforcement action with respect to a temporary delay in forwarding such payments or contributions to a qualified retirement plan during the Outbreak Period if the delay is solely attributable to the COVID-19 outbreak. In the event of such a delay, employers and service providers must act reasonably, prudently, and in the interest of employees to comply as soon as administratively practicable under the circumstances.
Under the Joint Notice, the Outbreak Period is disregarded for the purpose of counting the following time periods and deadlines applicable to group health plans, disability and other employee welfare benefit plans, and tax-qualified retirement plans subject to ERISA: