Retirement Plans Get Relief for Certain Requirements

The agency is relaxing timing rules for certain actions and notices if timing is affected by the COVID-19 outbreak.

The Department of Labor’s (DOL)’s Employee Benefit Security Administration (EBSA) has issued EBSA Disaster Relief Notice 2020-01 to provide relief for various requirements and deadlines under the Employee Retirement Income Security Act (ERISA).

The guidance applies to employee benefit plans, employers, labor organizations and other plan sponsors, plan fiduciaries, participants, beneficiaries and service providers subject to ERISA from March 1, the beginning of the national emergency declared by President Donald Trump, until 60 days after the announcement of the end of the COVID-19 national emergency or such other date announced by the DOL in a future notice. The guidance did not delay the due date of July 31 for filing Form 5500 for retirement plans with a December 31 plan year-end.

According to the notice, if a retirement plan fails to follow procedural requirements for verification for plan loans or distributions imposed by the terms of the plan, the DOL will not treat it as a failure if:

  • that 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 for verification procedures does not include spousal consent or other statutory or regulatory requirements under the jurisdiction of the Treasury Department and IRS.

Regarding plan amendments, the notice says if a plan is amended to provide the relief for plan loans and distributions described in section 2202 of the Coronavirus Aid, Relief and Economic Security (CARES) Act, the DOL will treat the plan as being operated in accordance with the terms of such amendment prior to its adoption if: the amendment is 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 the amendment meets the conditions of section 2202(c)(2)(B) of the CARES Act.

Generally, employee contributions and loan repayments 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. The DOL says it recognizes that some employers and service providers may not be able to forward participant payments and withholdings to employee pension benefit plans within prescribed time frames during the period beginning on March 1 and ending on the 60th day following the announced end of the national emergency. In such instances, it says it 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 such payments or contributions to the plan.

The DOL is providing similar relief regarding blackout notices.

The full scope of relief can be found in EBSA Disaster Relief Notice 2020-01. The DOL says it will continue to monitor the effects of the COVID-19 outbreak and may provide additional relief as warranted. 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 to those different areas.