COVID-19 Relief for Employee Benefits Plans: EBSA Disaster Relief Notice 2020-01 and Related Tax and Labor Regulations

As the COVID-19 pandemic continues to disrupt daily life, plan sponsors and fiduciaries of Employee Retirement Income Security Act (ERISA)-covered plans must navigate the complex landscape of employee benefit plan administration. Fortunately, the U.S. Department of Labor (DOL) has issued EBSA Disaster Relief Notice 2020-01 and related tax and labor regulations, providing broad compliance relief for plan fiduciaries and sponsors.

EBSA Disaster Relief Notice 2020-01 applies to disclosures and notices for plan participants and beneficiaries required to be furnished by Title I of ERISA or otherwise under the DOL's jurisdiction. Despite the breadth of the relief, plan fiduciaries are still required to act in good faith and furnish all required disclosures and notices as soon as administratively practicable under the circumstances. Notably, the notice clarifies that a "good faith" attempt to deliver required communications can be made via electronic means where the plan fiduciary reasonably believes that the intended recipients will have ready access to the electronic communication.

Key Takeaways:

• EBSA Disaster Relief Notice 2020-01 applies to disclosures and notices for plan participants and beneficiaries required to be furnished by Title I of ERISA or otherwise under the DOL's jurisdiction.
• Plan fiduciaries are still required to act in good faith and furnish all required disclosures and notices as soon as administratively practicable under the circumstances.
• The notice clarifies that a "good faith" attempt to deliver required communications can be made via electronic means where the plan fiduciary reasonably believes that the intended recipients will have ready access to the electronic communication.
• The DOL will temporarily excuse procedural failures by a plan administrator in overseeing the loan and distribution process where the failure is solely attributable to the COVID-19 outbreak and the administrator makes a good-faith diligent effort to comply and takes reasonable steps to correct the failures as soon as administratively practicable.
• ERISA's requirements that loans be adequately secured and made available on a reasonably equal basis are effectively waived for any loans made to qualified individuals under the CARES Act.
• Plan sponsors generally have until the end of 2022 (for plans operating on a calendar-year basis) to formally adopt any amendments needed to implement mandatory or optional provisions of the CARES Act for their retirement plans.
• The DOL will temporarily excuse-tardy transfers of employee contributions and loan payments, provided the plan fiduciaries and vendors act reasonably, prudently, and in the best interests of plan participants to comply as soon as practicable.
• The DOL will excuse delayed blackout notifications attributable to the COVID-19 outbreak, even without the corresponding written determination by a plan fiduciary that ERISA otherwise requires.

Statistics:

• The EBSA Disaster Relief Notice 2020-01 applies to actions or filings beginning March 1, 2020.
• The relief continues until 60 days after the end of the COVID-19 national emergency or such other date specified by the DOL.
• The notice clarifies that a "good faith" attempt to deliver required communications can be made via electronic means where the plan fiduciary reasonably believes that the intended recipients will have ready access to the electronic communication.
• The DOL will temporarily excuse procedural failures by a plan administrator in overseeing the loan and distribution process where the failure is solely attributable to the COVID-19 outbreak and the administrator makes a good-faith diligent effort to comply and takes reasonable steps to correct the failures as soon as administratively practicable.

Sources:

• U.S. Department of Labor (DOL), EBSA Disaster Relief Notice 2020-01, April 29, 2020
• U.S. Department of the Treasury, IRS Notice 2020-23, April 2, 2020
• The Consolidated Omnibus Budget Reconciliation Act of 1985 (COBRA)
• The Employee Retirement Income Security Act of 1974 (ERISA)
• The Coronavirus Aid, Relief, and Economic Security (CARES) Act
• U.S. Department of Health and Human Services (HHS)