The Department of Labor (the “DOL”), the Department of the Treasury (the “Treasury”), and the Internal Revenue Service (the “IRS”) recently issued guidelines extending certain deadlines and providing certain relief for employees. retirement plans in response to the current COVID-19 pandemic. Covered below are (1) EBSA Disaster Relief Notice 2020-01, (2) DOL “COVID-19 FAQs for Participants and Beneficiaries”, (3) IRS Notice 2020-23, and (4) IRS “Coronavirus Related Relief for Retirement Plans and IRA Questions and Answers.”

In addition, the exemption from the time limits and extensions applicable to social and health benefit plans has also been released by these government agencies and will be the subject of an upcoming Liskow & Lewis COVID-19 Industry Update.

1. EBSA Disaster Relief Notice 2020-01

EBSA Disaster Relief Notice 2020-01 (the “Notice”) extends certain timelines for notifications required by ERISA as long as the Plan and the Responsible Trustee act in good faith and provide such notices. as soon as administratively possible in the circumstances. The extensions / suspensions described below are applicable for the period beginning March 1, 2020 and ending 60 days after the announced end of the national COVID-19 emergency (the “epidemic period”).

• Extensions for notifications and disclosures required under Title I of ERISA
  • Pension plans and trustees will not constitute a violation of ERISA for failure to provide timely notices and disclosures required under Title I of ERISA, provided that the Trustee acts in good faith and provides documents as soon as administratively possible in the circumstances.
  • As examples, here are the types of notices and disclosures to which this relief applies: SPD, SMM, annual summary reports, annual funding notices, QDIA notices, disclosure of participation fees, notice of extension and of denial of the grievance and appeal process, and responses to requests for planning documents.
• Good faith delivery includes the use of electronic means when the Plan Trustee reasonably believes that the participants have effective access, including emails, text messages and continuous access websites.
• Plan loans and distributions
  • Verification procedures
    • If an employee pension plan does not meet the procedural requirements for loans or distributions imposed by the terms of the plan, the DOL will not treat it as a failure if:
      • Such a failure is solely attributable to the COVID-19 epidemic;
      • The plan administrator makes good faith efforts to comply with the terms of the plan; and
      • The plan administrator makes a reasonable effort to correct any procedural deficiencies, such as gathering any missing documentation, as soon as administratively possible.
    • This does not include spousal consent or other requirements within the purview of the Treasury.
  • Loans to participants under the CARES Act
    • DOL will not treat any person as having violated the provisions of Title I of ERISA, including adequate safety requirements and reasonably equivalent basis, solely because:
      • (1) the person has made an off-plan loan to a qualified person during the loan relief period in accordance with the CARES Act and the provisions of any related IRS notices or other published guidelines; Where
      • (2) a qualified person has delayed repayment of a plan loan in accordance with the CARES Act and the provisions of any related IRS notices or other published guidelines.
  • You will find more information on loans to participants under the CARES Act here.
• Participant contributions and loan repayments
  • DOL will not take any enforcement action with respect to a temporary delay in the transmission of contributions and loan repayments to a pension scheme.
    • The delay must be based on a failure attributable to the COVID-19 outbreak.
    • Employers and service providers must act reasonably, prudently and in the best interests of employees to comply as soon as administratively possible under the circumstances.
• Notice of prohibition
  • Under the notice, plan administrators are not required to provide advance prohibition notices.
    • Generally, the administrator of an individual plan of account is required to give 30 days’ notice to participants and beneficiaries whose rights under the plan will be temporarily suspended, limited or restricted by a blackout period.
    • For example, a period of suspension, limitation or restriction of more than three consecutive business days on a participant’s ability to direct investments, obtain loans or obtain other distributions from the plan results in a period of ban and triggers the notice.

2. DOL COVID-19 FAQ

The DOL has also published “COVID-19 FAQs for Participants and Beneficiaries”. The FAQS has been published to help plan members affected by the COVID-19 pandemic understand their rights under ERISA with respect to pension benefits. These FAQs will also be useful to plan sponsors and employers. It should be noted that the FAQS does not provide any new guidance. A full list of questions and answers can be found here.

3. IRS Notice 2020-23

IRS Notice 2020-23, which amplifies Notices 2020-18 and 2020-20, provides additional relief to affected taxpayers by extending certain IRS deadlines. For plan sponsors, administrators and certain members, IRS Notice 2020-23 provides relief regarding certain urgent actions described in Tax Procedure 2018-58 that must be completed on or after April 1, 2020 and before July 15, 2020. Some of these timing elements are referenced below. For a complete list of urgent actions related to employee benefit plans, see those listed in Section 8 of the Tax Procedure. Unless the IRS provides further relief at a later date, the actions outlined below must be completed by July 15, 2020.

• Form 5500
  • The IRS notice extends the Form 5500 filing deadline for any benefit plan whose plan year ended in September, October, or November 2019 (which normally should have been due in April, May and June 2020), as well as other plans for which a deposit has been authorized. extension during the period of April 1 and July 15, until July 15, 2020.
    • It is important to note that the EBSA Notice and IRS Notice 2020-23 do not offer any additional relief for calendar year plans with a regular due date of July 31, 2020.
• Excess contributions and carry-overs
  • The deadline for plans to correct excess contributions to the pension plan due to failed non-discrimination tests for a plan year and excess carry-overs exceeding IRS limits is extended to July 15, 2020.
• Loan repayment plan
  • Participants in defined contribution pension plans can defer repayment due on an existing plan loan, initially due between April 1, 2020 and July 14, 2020, until July 15, 2020.
    • This applies to all borrowers, not just those affected by COVID-19.
• 60 day rollover period
  • Any participant who transfers funds from one qualifying retirement plan, including an IRA, to another, where the normal 60-day period is between April 1, 2020 and July 14, 2020, can transfer those funds to the new one. plan until July 15. , 2020.
    • This would generally provide relief, through an extended rollover period, for eligible rollover distributions (including RMDs, which are canceled for 2020) that were received between February 1, 2020 and May 15, 2020, but distributions taken before or after this window would not qualify for relief under Notice 2020-23.
• 83 (b) Elections
  • Normally, an 83 (b) election must be made no later than 30 days after the date on which the restricted asset was transferred. Notice 2020-23 extends this deadline until July 15, 2020 if the 30-day election period ends between April 1, 2020 and July 14, 2020.
• Some distributions to avoid the additional 10% tax
  • This includes the deadlines for making distributions to satisfy the substantially equal periodic payment exception and the deadline for distributing certain non-deductible contributions to a qualifying employer plan.
• Auto correction
  • The correction period for self-correction of some insignificant plan operational failures (normally the last day of the second plan year following the plan year in which the failure occurred) is postponed.

4. IRS “Coronavirus Relief for Pension Plans and IRA Questions and Answers”

On May 4, the IRS published a series of FAQs providing additional advice on special distributions related to coronaviruses and plan loan options under the CARES Act. To be reviewed, section 2202 of the CARES Act provides for expanded distribution options and favorable tax treatment for up to $ 100,000 of coronavirus-related distributions from certain pension plans eligible for qualified persons, as well as special rules payback and rollover with respect to these distributions. It also increases the limit on how much a qualified person can borrow from certain qualifying retirement plans (especially excluding IRAs) and allows a plan to provide qualified people with an extended period to repay their loans. You will find more information on article 2202 of the CARES law here.

Here are some highlights from the FAQ:

• The IRS and the Treasury plan to issue additional guidance “in the near future.”
• In the meantime, the IRS suggests referring to IRS Notice 2005-92 as foreseen, the guidelines on the CARES law will apply the principles of the opinion.
  • Advisory 2005-92 provided guidance on the beneficial tax treatment of distributions and plan loans under the Katrina Emergency Tax Relief Act of 2005 (“KETRA”).
• Coronavirus-related distributions and CARES Act loans are optional. A plan can choose whether and to what extent to offer the distributions and loans available under the CARES Act.
• Plans may rely on a member’s self-certification indicating that they are eligible for a distribution or a CARES Act loan. A misrepresentation by a participant will not disqualify the plan.
• The IRS expects pension plans eligible for the relief to accept refunds of coronavirus-related distributions, but a plan is not required to change its terms or procedures to accept refunds.

A full list of questions and answers can be found here.