Further federal guidance regarding deadline relief for 401k plans impacted by CARES Act changes is here.
The Employee Benefits Security Administration (EBSA) of the Department of Labor (DOL), together with the Department of the Treasury, issued new guidance on April 28 for retirement plans that extends certain deadlines and provides other relief in light of the coronavirus outbreak.
The deadline relief and other guidance under Title I of the Employee Retirement Income Security Act of 1974 (ERISA) is intended to help employee benefit plans, plan participants and beneficiaries, employers and other plan sponsors, plan fiduciaries, and other service providers impacted by the crisis.
“EBSA will continue to safeguard the employee benefits of American workers while ensuring that employers and plans have the flexibility they need to continue delivering benefits during this challenging time,” said Assistant Secretary of Labor for EBSA, Preston Rutledge (who recently announced he is retiring from the position effective May 31).
The new guidance is provided in three separate pieces:
- EBSA Disaster Relief Notice 2020-01 (EBSA Notice 2020-01)
- A final rule for publication in the Federal Register that contains a joint notice issued by both the DOL and the Department of the Treasury (the “Joint Notice”)
- A new list “COVID-19 FAQs” for Participants and Beneficiaries (COVID-19 FAQs)
The guidance will significantly affect ERISA-covered retirement plans, plan sponsors, fiduciaries, plan participants and beneficiaries and plan service providers.
It comes in the aftermath of the CARES Act’s amendment to section 518 of ERISA, which expressly permits the DOL to postpone for up to one year (by notice or otherwise) any deadline for any action that is required or permitted to be completed under ERISA where the plan, sponsor, participant or other person is affected by a Presidentially declared disaster or public health emergency.
The guidance specifically notes that both DOL and the Treasury Department are monitoring the COVID-19 outbreak and could provide additional relief in the future.
“This relief provides much needed flexibility in meeting DOL participant notice and disclosure requirements, addressing claims, making plan contributions, and meeting DOL filing deadlines,” states a Groom Law Group brief on the subject released on April 30. “Along with the added flexibility of relaxed electronic delivery rules, this good faith compliance measure makes plan administration in these very difficult times more manageable.
In general, the brief concluded, “plan sponsors and plan fiduciaries should take comfort in the DOL and joint agency guidance,” but went on to list several important considerations to keep in mind.
EBSA Notice 2020-01
EBSA Notice 2020-01 provides important relief on deadlines for providing certain participant-level notices and disclosures, authorizing and implementing plan loans and distributions, making participant contributions to a plan, and providing blackout notices in light of the new CARES Act provisions.
The Groom brief points out that notably, there was no further extension of the annual Form 5500 deadline. In addition, the Notice announces apparently relaxed DOL enforcement efforts during the COVID-19 pandemic.
Full details are in EBSA Notice 2020-01.
The Joint Notice
A Department of Labor notice, jointly issued with the Department of the Treasury and Internal Revenue Service, extends the timeframe during which certain actions must take place in connection with the plan’s claims procedures maintained under ERISA section 503.
These extensions provide participants additional time to make important decisions affecting their benefits, including retirement plans, during the coronavirus outbreak. As relevant here, a retirement plan must allow a participant at least 60 days following receipt of a notice of an adverse benefit decision in which to file an appeal.
Although the Joint Notice does not address the timing requirements for plans to send notices of adverse benefit decisions and appeals, those notice deadlines may be extended in connection with the “good faith” participant notice relief described in EBSA Notice 2020-01.
The joint notice is posted on EBSA’s website and will be published in an upcoming edition of the Federal Register.
COVID-19 FAQ
The department also issued a set of Frequently Asked Questions (FAQs) on health benefit and retirement benefit issues to help employee benefit plan participants and beneficiaries, plan sponsors, and employers impacted by the coronavirus outbreak understand their rights and responsibilities under ERISA.
The FAQs provide no substantive legal interpretations, the Groom Law Group states, instead providing information for participants and employers in connection with receiving distributions or in the event of problems or delays in exercising plan rights.
For example, where participants experience problems filing claims or receiving information or distributions from a plan, the FAQs provide information on who to contact.
In addition, the FAQs generally describe the relaxed participant loan and distribution rules under the CARES Act as a possible way of receiving financial assistance from a retirement plan. The FAQs also explain that certain plan disclosures (such as 401k benefit statements) may be delayed during in the COVID-19 outbreak.
Veteran financial services industry journalist Brian Anderson joined 401(k) Specialist as Managing Editor in January 2019. He has led editorial content for a variety of well-known properties including Insurance Forums, Life Insurance Selling, National Underwriter Life & Health, and Senior Market Advisor. He has always maintained a focus on providing readers with timely, useful information intended to help them build their business.
