COVID-19 Disaster Relief for the Retirement Side

Seyfarth Synopsis: Last Tuesday, the U.S. Department of Labor (DOL) granted relief for a number of deadlines related to the administration of employee benefit plans, including furnishing notices and disclosures to plan participants, filing and processing benefit claims, and depositing employee contributions, as a result of the COVID-19 national emergency. The relief is contained in two separate notices, one issued just by the DOL and one issued jointly with the IRS. The relief that is primarily applicable to 401(k) and other retirement plans is summarized in this posting. Click here for a description of the relief applicable to health and welfare plans.

In general, the DOL relief provides that any type of notice, disclosure or other document that is due to be provided to a plan participant between March 1, 2020, and 60 days after the date on which the COVID-19 national emergency is formally announced as over (the “Outbreak Period”), will not be considered late if the plan administrator acts in good faith to furnish the notice or disclosure as soon as practicable under the circumstances. This isn’t a blanket extension of deadlines to file these notices or disclosures, as plan administrators must demonstrate that they furnished the required notice or disclosure as soon as practicable under the circumstances.

Notices and disclosures covered under this relief would include regular benefit statements, summary plan descriptions and summaries of material modifications, summary annual reports, and annual fee disclosure notices. Blackout notices are singled out for special mention since the regulations already provide that a blackout notice can be furnished as soon as practicable if the normal 30 day deadline cannot be due to circumstances beyond the plan administrator’s control.

Two deadlines that are apparently not extended, and which are of particular concern to employers looking to reduce benefit costs during the COVID-19 crisis, are the 30-day notice that a 401(k) plan is discontinuing safe harbor matching, and a 45 day notice of a reduction of future benefit accruals under a defined benefit pension plan as required under ERISA §204(h). Although the latter provision is part of ERISA, it is enforced by an excise tax and the implementing regulations are under the jurisdiction of the IRS.

The joint DOL/IRS notice also extends all deadlines for filing and processing benefit claims and appeals by providing that the period of time during the Outbreak Period is tolled (i.e., not counted in determining whether the deadline is met). This applies to all deadlines, including deadlines imposed by the plan document as well as those under the ERISA claims review regulations. Unlike the extension of time for furnishing notices and disclosures discussed above, this is a blanket extension of time that does not require the participant or other claimant to demonstrate that she was unable to meet the filing deadline because of the pandemic.

Other relief provided by the DOL includes:

Failure to timely deposit 401(k) withholding and loan repayments, to the extent caused by the COVID-19 crisis.
Failure to obtain any substantiation required by the plan for processing loans and distributions, provided that the plan administrator makes a good faith effort to obtain the substantiation as soon as practicable. This does not excuse the failure to obtain a spousal consent if required. This will generally not affect the additional distributions, loans and loan extension payments authorized by the CARES Act if the plan permits affected participants to self-certify so that no substantiation is required.
An extension of time to July 15, 2020, to file Form 5500, which is consistent with the extension previously announced by the IRS for filing other tax returns. However, since Form 5500 for a calendar year plan is not due until July 31 (unless extended), this will have little effect.

For more information on legal issues related to the coronavirus pandemic, click here to access Seyfarth’s COVID-19 Resource Center.