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Relief for Employee Benefit Plan Fiduciaries Due to COVID-19

May 11, 2020

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Key Points:

  • Private sector plan fiduciaries now have additional time during the COVID-19 outbreak to furnish required notices and disclosures to participants and beneficiaries under guidance issued by the U.S. Department of Labor (DOL) (the “Relief Notice”).
  • The relief applies only if the plan fiduciary acts in good faith, which can include providing electronic disclosure for now, and furnishes the notice or disclosure as soon as administratively practicable. Plan fiduciaries should be ready to fully comply with the notice and disclosure rules when normal business operations resume.

The Department of Labor (DOL) has issued a "Relief Notice," providing ERISA plan fiduciaries additional time to furnish required notices and disclosures to participants and beneficiaries. For governmental plans that are not subject to ERISA, the U.S. Department of Health and Human Services will extend similar timeframes otherwise applicable under the Public Health Service Act.

Relief for Plan Fiduciaries for Good Faith Efforts to Comply with Certain Deadlines

The Relief Notice applies for plan notices and disclosures that must be furnished between March 1, 2020 and the date that is 60 days after the announced end of the COVID-19 national emergency, referred to as the “Outbreak Period.” These include, for example, annual funding notices, quarterly benefit statements, and plan documents required to be provided to new participants or upon request.

Under the Relief Notice, plan fiduciaries will not be in violation of ERISA for a failure to timely furnish a notice, disclosure, or document that is due during the Outbreak Period, if the plan fiduciary acts in good faith and furnishes the item as soon as administratively practicable under the circumstances (and subject to the one-year extension limit under ERISA Section 518.) Good faith acts include use of electronic disclosure for participants who the plan fiduciary reasonably believes have effective access to email, text messages, or continuous access websites.

The Relief Notice also provides relief for plan sponsors related to specific administrative activities during the Outbreak Period, including:

  • A failure to follow a plan’s participant loan verification procedures;
  • A failure to forward to the plan any employee contributions or amounts to repay plan loans within 15 business days of when the amounts were paid to or withheld by the employer; and
  • An inability, due to events beyond the reasonable control of the plan administrator, to provide required “blackout notices” with respect to participants’ temporary inability to direct investments or access their accounts.

The Relief Notice also clarifies how the DOL requirements to adequately secure participant loans and to offer loans on a reasonably equivalent basis to all plan participants will be met for plans that adopt optional loan provisions in accordance with the CARES Act.

General ERISA Fiduciary Compliance Relief

While the COVID-19 Outbreak lasts, plan fiduciaries should make reasonable accommodations to prevent the loss of benefits or undue delay in benefit payments because of a failure to comply with certain deadlines. The DOL recognizes, however, that the situation may prevent plan sponsors and service providers from achieving full and timely compliance with claims processing and other requirements, and will take a “compliance assistance” approach to enforcement, which may include grace periods and other relief where appropriate.

Additional DOL Guidance Extends Deadlines for Participants and Answers COVID-19 Related Benefit Issues

Along with the Relief Notice, the DOL issued a “notification of relief” to extend certain deadlines and timeframes applicable to participants under ERISA plans. Please see our accompanying alert on that guidance.

The DOL also issued a set of Frequently Asked Questions (FAQs) on health benefit and retirement benefit issues to help participants and beneficiaries, plan sponsors, and employers impacted by the COVID-19 outbreak understand their rights and responsibilities under ERISA.

If you have questions, please feel free to reach out to your contact in the Hanson Bridgett Employee Benefits Group.

For more information, please contact:

Elizabeth Masson

415-995-5106 Direct Phone
415-995-3593 Fax

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