COVID-19 relief for employer-financed pension schemes: Federal government announces deadline extensions and other short-term relief | Perkins Coie
Many sponsors, administrators and trustees of employee benefit plans have asked for regulatory relief in response to the administrative challenges caused by the COVID-19 pandemic. Recently, the U.S. Department of Labor (DOL), Department of Treasury (Treasury), and Department of Health and Human Services (DHHS) issued a joint notice amending certain benefit plan notice, reporting, and election deadlines imposed by ERISA and the Code will. Additionally, DOL’s Employee Benefits Security Administration (EBSA) and Pension Benefit Guaranty Corporation (PBGC) have issued additional short-term relief. This update summarizes these respective measures taken by the agency.
Joint Notice of Extension of Certain Time Frames for Employee Benefit Plans, Participants and Beneficiaries Affected by COVID-19
On Monday, April 28, 2020, EBSA, Treasury, the Internal Revenue Service (the IRS), and DHHS jointly announced the extension of ERISA and Code-mandated filing, reporting, and election deadlines for employee benefit plans (to be published in the federal register):
- Facilitations for Participants, Beneficiaries, Qualified Beneficiaries and Applicants: All group sickness, disability, other social security and pension benefit plans must disregard the period from March 1, 2020 to 60 days after the announcement of the end of the national emergency declared under the Stafford Act (the Outbreak Period) (or the like) other date than designated by the Agencies) for the purposes of the following deadlines:
- Thirty-day special filing periods under the Health Insurance Portability and Accountability Act of 1996 (HIPAA)
- 60-day election periods with rolling reporting under the Consolidated Omnibus Budget Reconciliation Act of 1985 (COBRA)
- The deadline for participants to make COBRA award payments on time
- The date by which individuals must notify plan administrators of qualifying events or determinations of disability
- The time limits by which individuals must submit a benefit claim or an appeal against an adverse benefit determination under the Plan’s entitlement processes or a request for external review upon receipt of an adverse benefit determination or a final internal adverse benefit determination
- The time limits by which an individual must submit information to complete an external review request after previously determining that the request was incomplete
- Relief for group health insurance: For group health plans, plan sponsors, and plan administrators, the time period of the outbreak will not be considered in determining the date for delivery of a COBRA election notice to qualifying beneficiaries. The agencies can offer additional simplifications in further guidelines.
EBSA Disaster Relief Notice 2020-01
Pursuant to the authority granted to the DOL Secretary under the Coronavirus Aid, Relief and Economic Security Act (the CARES Act), EBSA has announced the following additional extensions to benefit plan notification and reporting deadlines EBSA Disaster Relief Notice 2020-01:
- For notices and disclosures to plan participants, beneficiaries and others otherwise required under Title I of ERISA and subject to the DOL Regulation: Plan Trustees are not deemed to have violated ERISA with respect to any plan notices or disclosures due during the Outbreak Period (e.g., annual funding notices for certain pension plans that were due by April 30, 2020), so long as Plan Trustees will act in good faith and will provide the notices or disclosures as promptly as reasonably practicable under the circumstances. During the Outbreak Period, Plan Trustees will be deemed to be acting in good faith in providing notices and disclosures to Plan Participants and Beneficiaries via electronic communications such as email, text messages and continuous access websites, so long as the Trustees have a reasonable belief that the Recipients have access to these electronic means of communication.
- For plan loans and distributions: EBSA provided short-term remediation by not treating violations of plan loan and distribution review procedures as failures as long as the deviation from plan terms and procedures: (1) is due to COVID-19; (2) the Plan Administrator has made good faith efforts under the circumstances to comply with applicable Plan terms and procedures; and (3) the Plan Administrator will make a reasonable attempt to remedy procedural deficiencies as soon as reasonably practicable thereafter.
- For participant loans under the CARES Act: EBSA will not treat any person as having violated plan loan requirements and restrictions under Title I of ERISA simply because that person: (1) made a plan loan to a qualified person under the provisions of the CARES Act and applicable IRS guidelines ; or (2) a Qualified Person delays repayment of a plan loan in accordance with the provisions of the CARES Act and other IRS policies. In addition, EBSA will treat a plan that offers CARES Act eligible participant loans as compliant with the terms of an amendment to implement such loans so long as the amendment is accepted no later than the last day of the first plan year beginning or after January 1, 2022 and the terms of the amendment comply with the requirements of the CARES Act.
- Ease of enforcement for outstanding contributions: EBSA will not take enforcement action against plan sponsors and trustees for delays in onward transmission of participant contributions and loan repayments caused by COVID-19, so long as the delay is temporary and the plan administrator acts reasonably, prudently and in the best interests of the plan participants, forward such payments as soon as possible under the circumstances.
- Easing the requirement to distribute certain advance notices of power outages: Individual account plans are not required to distribute blackout notifications prior to a blackout period during the outbreak period. Generally, a plan may not be subject to such advance notice if events beyond the plan administrator’s control prevent the delivery of the notice. This determination must be made in writing by the plan trustee. However, EBSA noted that this written statement is not required during the outbreak period as EBSA, by definition, considers pandemics to be beyond the control of a plan administrator.
- Submission Deadlines for Forms 5500 and M-1: In accordance with IRS guidelines, EBSA has extended the deadline for Forms 5500 and M-1s due between April 1, 2020 and July 14, 2020 to July 15, 2020 (i.e. primarily for plans outside of the calendar year).
- General fiduciary principles: EBSA stressed that the guiding principle for plans, administrators and trustees should be to act reasonably, prudently and in the best interests of the individuals covered by employer-sponsored benefit plans. In addition, EBSA indicated that plan administrators should take reasonable precautions to avoid benefit losses and undue delays in benefit payments. EBSA also plans to emphasize compliance support during the duration of the declared national emergency in addressing plan failures.
EBSA COVID-19 FAQs for participants and beneficiaries
EBSA also issued a number of frequently asked Questions (FAQs) for participants and beneficiaries of benefit plans to understand how their rights under ERISA are affected by the COVID-19 pandemic. While these FAQs are helpful for participants and beneficiaries to understand how their benefit plan interactions (e.g., how to make coverage choices, how to request distributions, and when to expect to receive plan disclosures and notifications) during the Breakout Periods may change but are not intended as formal guidance and do not alter the legal obligations of any plan sponsor, administrator or trustee.
PBGC Press Release 20-02
In the PBGC Press release 20-02, PBGC extends to July 15, 2020, due dates for PBGC filings and lawsuits that were due in the period from April 1, 2020 to July 14, 2020. This extension follows PBGC’s standard disaster relief policy and does not include critical or time-sensitive submissions on the exception list. The due dates for the following notices and actions have not been extended: advance notices of reportable events, notices of large missed contributions, post-event notices for certain reportable events, and certain actions related to emergency terminations.
These deadline extensions and other forms of near-term relief provide opportunities for employee benefit plans to remain compliant with ERISA, the Code, and other applicable laws and policies despite significant complications from the COVID-19 pandemic. Plan sponsors, administrators and trustees should consult with legal counsel to determine whether such extensions or other forms of relief apply to their plans and how their standard plan administration processes should be modified as a result.