In recognition of the difficulties faced by retirement plan sponsors, participants and beneficiaries due to the COVID-19 pandemic, the Department of Labour (DOL), in conjunction with the Internal Revenue Service (IRS) and the Department of the Treasury, recently issued guidance extending a number of retirement plan deadlines, including deadlines for many participant notices and benefit plan claims.
The new guidance extends the deadlines for notices and disclosures required by Title I of the Employee Retirement Income Security Act 1974 (ERISA) and the deadlines for plan participants and beneficiaries to submit benefit claims and benefit appeals. The new guidance also provides some welcome fiduciary relief for electronic disclosures, incomplete plan loan or distribution documentation and delayed participant contributions and loan repayments.
However, the new guidance does not extend the 2019 Form 5500 for a calendar-year retirement plan. The guidance also provides fiduciary relief for retirement plans in the areas of electronic disclosures and plan loans, distributions and contributions. Finally, the guidance includes relief applicable to group health plans. Plan sponsors, administrators and fiduciaries should be aware of these extensions and other relief as they continue to navigate the impact of the COVID-19 pandemic on their retirement plans.
Extension of certain disclosures and notices
The new guidance provides relief to retirement plan administrators for deadlines to furnish ERISA-mandated statements, disclosures and notices beginning on 1 March 2020 and ending 60 days after the announcement of the end of the national emergency (the COVID-19 period). Specifically, during the COVID-19 period, required notices may be delayed, provided that the fiduciary acts in good faith and furnishes the communication as soon as practical. Some of the extended notices and disclosures include:
- annual funding notices;
- blackout notices;
- summary annual reports;
- summary plan descriptions;
- qualified default investment alternative notices; and
- other notices or disclosures required under Title I of ERISA.
Limited extension for Form 5500 filings
Retirement plans subject to ERISA generally must file a Form 5500 by the end of the seventh month after the end of the plan year (for calendar-year plans, the deadline is 31 July of the following year). Guidance previously extended any Form 5500 filing that would otherwise be due between 1 April 2020 and 15 July 2020 to a new deadline of 15 July 2020, without the need to request an extension. However, for a calendar-year plan, the 2019 Form 5500 still is due by 31 July 2020, but may be extended using IRS Form 5558 until 15 October 2020.
Expansion of permitted electronic disclosure
The guidance also allows the use of alternative electronic means for communicating with retirement plan participants and beneficiaries during the COVID-19 period, if the fiduciary reasonably believes that such individuals have effective access to email, text messaging or the plan sponsor's intranet or website. The DOL historically resisted allowing plan sponsors to use electronic disclosures, but the expansion of electronic communication during the COVID-19 period closely follows a proposed DOL regulation to relax electronic disclosure of retirement plan notices and required information.
Fiduciary relief for loans, distributions and contributions
The guidance contains relief for plan fiduciaries in connection with retirement plan loans and distributions. Failure to follow procedural requirements for plan loans or distributions will not violate the ERISA if:
- the failure is solely attributable to the COVID-19 pandemic;
- the plan administrator makes a good-faith effort to comply with the procedural requirements; and
- the plan administrator makes a reasonable attempt to correct any procedural deficiencies (eg, assembling missing documentation) as soon as administratively practical.
This relief does not apply to any other requirements under the IRS's jurisdiction, such as a failure to comply with spousal consent requirements for a retirement plan loan or distribution.
Additional fiduciary relief is granted for participant contributions and loan repayments to retirement plans. Under the ERISA, such contributions and repayments generally must be made no later than 15 business days following the month in which the amounts were withheld from payroll (but the DOL generally takes the position that such amounts must be forwarded to a retirement plan's trust within a few days of payroll). Recognising that employers and plan service providers may experience difficulties forwarding payments within this timeframe, the DOL provided that it will not take enforcement action with respect to a temporary delay in contributions or repayments to a retirement plan, provided that:
- the delay is solely because of the COVID-19 pandemic;
- the delay occurs during the COVID-19 period; and
- the plan sponsor forwards such payments as soon as administratively practical.
Extended benefit claims and appeal timetables
The ERISA prescribes certain timeframes during which plan participants or beneficiaries must file benefit claims and appeals, and timeframes during which plan fiduciaries must decide such claims and appeals. The new guidance extends the time for retirement plan participants and beneficiaries to file benefit claims or appeals of denied benefit claims. Specifically, retirement plans must disregard the COVID-19 period in determining the dates by which participants and beneficiaries are required to make benefit claims or benefit appeals. For example, although a plan participant must normally appeal a denied retirement plan claim within 60 days, the deadline for such appeal is extended until the end of the COVID-19 period. Even though the guidance does not specifically address a fiduciary extension of the period to decide a benefit claim or appeal, notification of such decisions also are likely extended (as a required by Title I notice under the ERISA).
The recent guidance reflects an acknowledgement that retirement plan sponsors, administrators and participants may be struggling to comply with applicable deadlines and requirements for retirement plans in the midst of the COVID-19 pandemic. Plan sponsors and administrators should consider all available extensions and relief as they continue to administer retirement benefits during 2020.
