Plan Sponsor Relief in the April 29 DOL Announcement
On April 29, the Department of Labor (DOL) published EBSA Disaster Relief Notice 2020-01 (the Notice), which provides relief to notice and disclosure requirements under the DOL’s jurisdiction, clarified a number of compliance requirements, and aligned the Form 5500 deadline with the extension provided by the IRS in Notice 2020-23 on April 9. The Notice also contains general guidelines for the fulfillment of fiduciary duties and outlined a broad enforcement approach to be used by the DOL during the COVID-19 National Emergency. The DOL indicated that they will continue to monitor coronavirus-related events and may provide other relief as necessary.
Participant Notices and Disclosures – The DOL has given plan fiduciaries additional time to meet their obligations under Title of I ERISA during this time. The relief applies to the documentation which must be provided between March 1, 2020 and 60 days after the COVID-19 National Emergency is declared over.
To rely on this provision, plan fiduciaries must “act in good faith and furnish the notice, disclosure, or document as soon as administratively practicable under the circumstances”.
The DOL noted that acts of “good faith” include the use of electronic communications to share notice and disclosure documents. The specific means of electronic communications mentioned in the Notice are email, text messages and continuous access websites. To use the electronic communication approach, plan fiduciaries must reasonably believe that the parties for whom notices and disclosures are intended have effective access to email, text messages and websites.
This extension applies to the furnishing of notices, disclosures and other documents required by provisions of Title I of ERISA over which the DOL has interpretive and regulatory authority (e.g., benefit statements, Summary Annual Reports, Participant Fee Disclosures, Summary Plan Descriptions, etc.). Refer to the DOL’s Reporting and Disclosure Guide for Employee Benefit Plans for more information.
Importantly, this relief extends to plan amendments required by the Coronavirus Aid, Relief, and Economic Security (CARES) Act.
Blackout Notices – Generally, a blackout notice needs to be provided 30 days before a plan participant’s or beneficiary’s ability to take loans, distributions or direct investments is suspended, limited, or restricted by more than three days. The DOL has granted relief for situations where a plan sponsor is unable to provide ample notice due to coronavirus-related events. Furthermore, plan fiduciaries are not required to document this decision in writing as otherwise prescribed by law.
Plan Loans – Generally, plans must follow procedural requirements to verify eligibility for certain withdrawals. The DOL will provide relief if: the failure is coronavirus-related, the plan sponsor makes a good-faith effort to comply with the requirements and makes a reasonable attempt to correct any procedural deficiencies, such as assembling any missing documentation, as soon as administratively practicable.
In addition, the DOL indicated that when plan sponsors implement relaxed CARES Act loan provisions, the applicable DOL compliance rules will be deemed satisfied if the plan sponsor follows the Treasury and IRS guidelines.
Participant Contributions and Loan Repayments – Generally, participant contributions and loan repayments are required to 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. In addition, a seven-business-day safe harbor is provided to small retirement plans.
The DOL has provided relief for depositing participant contributions and loan repayments during the period beginning on March 1, 2020 and ending on the 60th day following the announced end of the COVID-19 National Emergency. Special conditions apply to rely on this relief:
- A failure to deposit timely must be attributed solely to the COVID-19 outbreak;
- Plan fiduciary and/or service provider’s actions are reasonable, prudent and in the interest of the employees;
- Amounts withheld from employee pay are deposited as soon as administratively practicable under the circumstances.
Form 5500 Relief – The DOL aligned itself with the relief provided by the Treasury and the IRS in Notice 2020-23. Form 5500 deadlines from April 1, 2020, to July 14, 2020, have been extended to July 15, 2020. No additional relief was granted in this Notice. Since most calendar year plans are due on July 31, 2020, most clients will not get any additional time to file the Form 5500 outside of traditional extension request.
General Fiduciary Guidance – The DOL reminded plan fiduciaries to abide by the guiding principle that requires them to act reasonably, prudently and in the interest of the employees and their families. Plan fiduciaries should make reasonable accommodations to prevent the loss of benefits or undue delay in benefits payments and should attempt to minimize the possibility of individuals losing benefits because of a failure to comply with the usual pre-established timeframes.
With regard to enforcement efforts, the DOL promised to focus on compliance assistance, including grace periods and other relief ,when following the usual timeframes for participant requests and other related acts are not possible due to physical disruption to plan sponsors or plan service providers.
FAQs for Participants – The DOL also published 11 pages of FAQs directed at plan participants. While half of the questions relate to the continuation of health coverage, the remainder address several situations participants may face, such as wanting to make changes to investments, requesting disbursements and receiving periodic plan payments.
For discussion purposes only and in no way represents legal or tax advice. For advice regarding specific circumstances, the services of an appropriate legal or tax advisor should be sought.