In the wake of the most destructive California wildfire season on record, the Department of Labor (DOL) has issued compliance guidance and relief for benefit plans of employers and employees who were impacted.
“The Department recognizes that these wildfires may impede efforts by plan fiduciaries, employers, labor organizations, service providers, and participants and beneficiaries to comply with the Employee Retirement Income Security Act (ERISA) over the next few months,” the DOL wrote in a fact sheet released last week.
The following applies to benefit plan affiliates located in county or tribal areas identified by FEMA as disaster zones:
Verification Procedures for Plan Loans and Distributions
The Department won’t penalize for failure to follow procedural requirements for plan loans or distributions if it is “solely attributable to the 2018 California Wildfires;” a good-faith effort was made to comply; and reasonable attempts are made to fulfill required documentation as soon as possible.
Participant Contributions and Loan Repayments
If, solely because of the fires, participant payments and withholdings to plans are unable to be forwarded, the DOL will not consider it a failure. However, “[a]ffected employers and service providers must act reasonably, prudently, and in the interest of employees to comply as soon as practicable under the circumstances.”
Blackout Notices
Under normal circumstances, 30 days’ advance notice is required before suspending, limiting or restricting a participant’s rights for more than three business days (“a blackout period”). In instances where this is not possible due to extenuating circumstances, a fiduciary may deem a blackout notice unnecessary—in writing. But for blackouts related to the wildfires, the DOL has eliminated the need for fiduciary determination, “as natural disasters are by definition beyond a plan administrator’s control.”
ERISA Claims Compliance Guidance
The Department acknowledges the fires may interrupt pre-established deadlines and timely claims processing. As such, “[p]lan fiduciaries should make reasonable accommodations to prevent the loss of benefits or undue delay in benefits payments in such cases and should attempt to minimize the possibility of individuals losing benefits because of a failure to comply.”
Filing Relief
Lastly, the DOL expanded tax deadline relief to parties expected to file Form 5500s sometime between Nov. 8, 2018 and April 30, 2019. The due date has been extended to April 30, 2019, for all businesses within disaster zones.
Contact Information
The Department will continue to monitor and respond to the situation as appropriate. For more information, visit EBSA’s Disaster Relief pages for employers and advisers and workers and families, or contact the Department’s Employee Benefits Security Administration at www.askebsa.dol.gov or 1-866-444-3272. Questions about IRS guidance should be directed to the IRS at 1-877-829-5500.
Jessa Claeys is a writer, editor and graphic designer.
