Noteworthy Provisions of the Notice
- Extended Deadlines for Certain Required Notices/E-Delivery Permissible
- The Notice extends the deadlines for furnishing certain notices, disclosures and other documents required under Title I of the Employee Retirement Income Security Act (ERISA) (the Required Notices), such as summary plan descriptions, summaries of material modification, summary annual reports, annual funding notices, pension statements, blackout notices required for periods when plan participants cannot make investment or other elections in 401(k) plans, qualified default investment alternative notices, 204(h) notices of significant reduction in future benefit accruals, participant fee disclosures, ERISA 404(c) investment alternative information for participant directed accounts and suspension of benefits notices
- A plan sponsor or fiduciary will not be considered in violation of ERISA for failure to timely furnish the Required Notices due between March 1, 2020, and 60 days after the announced end of the COVID-19 national emergency (the Outbreak Period) if the plan and fiduciary act in good faith and furnish such document as soon as practicable
- Notably, good-faith acts include use of electronic media to deliver the required document to participants and beneficiaries whom the plan fiduciary reasonably believes have effective access to email, text messages and continuous-access websites
- Good-Faith Efforts Acceptable for Plan Loans and Distributions
- The DOL will not consider a plan to have failed to follow the plan’s procedure requirements with respect to plan loans and distributions, such as providing loans that exceed the amount allowed under the plan without the COVID-19-related amendments or loans with incorrect forms of documentation, if (i) the failure is solely attributable to the COVID-19 outbreak, (ii) the plan administrator makes a good-faith diligent effort to comply with those requirements and (iii) the plan administrator makes a reasonable attempt to correct any procedural deficiencies, such as assembling any missing documentation, as soon as practicable. The relief for verification procedures is limited to verification requirements under Title I of ERISA that are within the authority of the DOL and does not include spousal consent or other requirements under the jurisdiction of the Treasury Department or IRS
- The DOL will not treat any person as having violated Title I of ERISA solely because (i) the person made a plan loan to a qualified individual during the loan relief period in compliance with the Coronavirus Aid, Relief and Economic Security Act (CARES Act)2 and any related official guidance or (ii) a qualified individual delayed making a plan loan repayment in compliance with the CARES Act and any related official guidance
- If a plan is amended retroactively to provide plan loans and distributions as allowed under the CARES Act, the DOL will treat the plan as being operated in accordance with the terms of such amendment prior to a formal adoption of such amendment if (i) the amendment is made on or before the last day of the first plan year beginning on or after January 1, 2022, or such later date prescribed by the Secretary of the Treasury or his or her delegate, and (ii) the amendment satisfies the conditions of the CARES Act
- Relief From Timing Requirements for Depositing Participant Contributions/Loan Repayments: The DOL will not take enforcement action when the depositing of participant contributions and loan repayments during the Outbreak Period is delayed solely for reasons attributable to the COVID-19 outbreak. Nevertheless, employers and service providers must act reasonably, prudently and in the interest of employees to forward the employee withholdings or payments as soon as practicable
- Limited Form 5500 Filing Relief: The deadline for M-1 and certain other 5500 filings has been extended in accordance with IRS guidance relating to the COVID-19 emergency, if the filing otherwise would have been due between April 1 and July 15, 2020; the filing now is due July 15, 2020. But note that because the 2019 Form 5500 filing deadline for a calendar-year plan is July 31, 2020, this guidance does not delay this deadline
- General Fiduciary Guidance: Plan administrators must act reasonably, prudently and in the interest of the covered workers and their families; should make reasonable accommodations to prevent the loss of benefits or undue delay in benefit payments; and should try to minimize the possibility of individuals losing benefits due to failure to comply with established timeframes. The DOL acknowledges that some plan administrators and service providers may be unable to comply with claims processing and other ERISA requirements in a timely manner. As such, the agency’s approach to enforcement will emphasize 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.
Noteworthy Provisions Under the Joint Rule
- Extended Deadlines: The Joint Rule generally provides that the Outbreak Period must be disregarded for purposes of the periods or due dates listed below for all plan participants, beneficiaries, qualified beneficiaries or claimants, which extends and provides additional time for participants, and in limited cases plan sponsors, to comply with the following deadlines:
- Special Enrollment Periods: the 30-day period (or 60-day period, if applicable) for an employee to request special enrollment upon the loss of eligibility of other health coverage or the gain of a new dependent
- Deadlines for Consolidated Omnibus Budget Reconciliation Act (COBRA) Notices, Elections and Payments: the date for individuals to notify the plan of a qualifying event or disability determination; the date by which group health plans, their sponsors and administrators must provide COBRA election notices; the 60-day period within which a qualified beneficiary may elect COBRA continuation coverage; and the deadline for making COBRA premium payments
- Time Periods for Claims, Appeals and Request for External Review: the deadline by which individuals may file a benefit claim or an appeal of an adverse benefit determination under the plan’s claims procedures and, in the case of a non grandfathered plan, the deadline by which claimants may file a request for an external review after receipt of an adverse benefit determination or final internal adverse benefit determination and the deadline by which a claimant may file information to perfect an incomplete request for external review
Note that the extensions do not apply to the plan sponsor’s obligations to timely decide submitted benefit claims and appeals.
If you have any questions regarding how the Notice or the Joint Rule affects you or your employee benefit plan, please contact the Sidley lawyer with whom you usually work.
1Extension of Certain Timeframes for Employee Benefit Plans, Participants and Beneficiaries Affected by the COVID-19 Outbreak, 85 Fed. Reg. 26351 (May 4, 2020), available here.
The CARES Act, signed into law on March 27, 2020, provides a variety of relief to employee plans and their participants, including temporary increase in the amount allowed for plan loans and extension for loan repayments.