April 30, 2020
On April 28, 2020, the Department of Labor (DOL) and the Internal Revenue Service (IRS) (collectively, the Departments) announced that certain timeframes under the Employee Retirement Income Security Act (ERISA) and the Internal Revenue Code (Code) will be extended for employee benefit plans, plan participants and plan service providers impacted by the COVID-19 outbreak.
A final rule was released by the Departments and is available here. In addition, the DOL released a related Disaster Relief Notice 2020-01 to extend the time for plan sponsors and administrators to furnish benefit statements, annual funding notices, and other notices and disclosures required under ERISA if they make a good faith effort to provide the documents as soon as administratively practicable, as well as a new set of Frequently Asked Questions (FAQs) to help plan participants and employers impacted by the COVID-19 outbreak understand their rights and responsibilities under ERISA.
Plan sponsors of non-federal governmental plans and state agencies are encouraged to adopt similar rules that may be applicable to their group plans and their participants and beneficiaries.
In general, all employee welfare benefit plans must disregard the period between March 1, 2020 through the end of the “outbreak period” (date that is 60 days from the announced end of the COVID-19 national emergency period), in determining compliance deadlines for certain notification requirements:
Additional examples on applying the extensions are provided in the guidance.
The Departments will continue monitoring the effects of the COVID-19 pandemic and have reserved the right to provide additional relief, if warranted.
The DOL also separately announced an extension of deadlines for plan sponsors and fiduciaries to provide certain other ERISA required notices or disclosures to plan participants and beneficiaries that were required to have been furnished between March 1, 2020 and the end of the outbreak period. Relief is contingent upon making a good faith effort to provide the documents as soon as administratively practicable. The Notice explains that good faith acts include use of electronic means of communicating with plan participants who the plan sponsor reasonably believes have effective access to electronic means of communication, including email, text messages and continuous access websites.
This guidance is mainly directed to retirement plan disclosure obligations, including with respect to the following:
In addition, the DOL emphasizes general fiduciary compliance considerations for plans to act reasonably, prudently, and in the interest of plan participants and beneficiaries. Plan fiduciaries should make reasonable accommodations to prevent the loss of benefits or undue delay in benefit payments and should attempt to minimize potential losses of benefits resulting from not being able to comply with pre-established timeframes.
The DOL also acknowledges that there may be instances when plans and service providers may be unable to achieve full and timely compliance with claims processing and other ERISA requirements. The DOL’s approach to enforcement will be to provide compliance assistance and include grace periods and other relief where appropriate, including when physical disruption to a plan or service provider’s principal place of business makes compliance with pre-established timeframes for certain claims’ decisions or disclosures impossible.
For additional information, please contact your Burnham Benefits Consultant or Burnham Benefits at 949-833-2983 or firstname.lastname@example.org.
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