In response to the COVID-19 pandemic, the IRS extended certain deadlines affecting employee benefit plans, including the deadline for filing Form 5500 for plan years ending September to November 2019 The new deadline, announced in Notice 2020-23, is July 15, 2020.
Separately, the US Department of Labor (DOL) is extending the Employee Retirement Income Security Act (ERISA) deadlines for certain notification and disclosure requirements following the pandemic.
Form 5500 Disclaimer
Form 5500 and related schedules and attachments are used to report the financial terms, investments and operations of employee benefit plans. Typically, the form is due on the last day of the seventh month following the end of the plan year, with an optional extension of two and a half months.
Under IRS Notice 2020-23, “Form 5500 filings for plan years that ended in September, October, or November 2019, as well as Form 5500 deadlines falling between April 1 and July 15, 2020, as a result of a previously filed extension request are now due on July 15, 2020, âwrote Jason S. Luter, partner in the Dallas office of law firm Faegre Drinker.
No relief for later deadlines
The extension of Form 5500 “will surely be good news for the end of the year of the June 30 plan which had filed an extended deadline of April 15 (the usual deadline of January 31 + 2.5 months) – and which will now have until July 15 to file, “according to the American Society of Pension Professionals & Actuaries (ASPPA). However, the group added,” the news will be sobering for these plans with calendar year-endings – for which their July 31 deadline is fast approaching.
Brian Graff, CEO of the American Retirement Association, of which the ASPPA is affiliated, told ASPPA: âWe hope and expect that there will be further guidance automatically extending the deadline for the form. 5500 for calendar year plans July 31 through October 15. especially since the IRS Ogden service center has been closed and there is now no room to send in Form 5558 to request an extension. ” [Update: The
IRS did not extend Form 5500 filing deadlines for calendar-year plans beyond the normal July 31 due date.]
[SHRM members-only HR Q&A:
What is Form 5500, and where are instructions for completing it?]
401 (k) Waiver of delay
Notice 2020-23 also extends other deadlines for employee benefit plans until July 15, 2020, as reported by law firm Ballard Spahr. The following are among the extended deadlines affecting 401 (k) and other defined contribution pension plans:
- Plan loan repayments. Participants who owe monthly off-plan loan repayments from April 1 to July 14, 2020 now have until July 15, 2020 to make those repayments. However, plan sponsors are not required to implement the loan repayment deadline and can choose not to.
- Refund of excess contributions. For the 401 (k), 403 (b) and government 457 (b) pension plans, employee contributions, made through optional payroll deferrals, are limited to an annual dollar amount. If the optional employee deferrals exceeded the 2019 contribution limits, the plans would be required to repay the excess and any related investment income to the member by April 15, 2020. According to IRS guidelines, this deadline is extended until July 15, 2020. The extension also applies. correcting excess pension contributions, which must be returned to highly paid members when a plan fails annual non-discrimination tests, in order to prevent plans from favoring high earners or key employees.
- 60 day renewal period. When a participant receives funds as an indirect rollover from a defined contribution pension plan, that distribution may be deferred tax-free to another qualifying pension plan, such as a 401 (k) d plan. ” a new employer or an individual retirement account, no later than the 60th day following the day on which the participant received the distribution. If the end of the 60-day period falls from April 1 to July 14, 2020, the deadline is automatically extended until July 15, 2020.
Defined benefit pension plans
For defined benefit pension plans, the Pension Benefit Guaranty Corporation (PBGC) has announced that it will extend the deadline until July 15, 2020, for upcoming PBGC insurance premium payments and certain other required deposits that would have been due from April 1 to July 14, 2020..
However, “notably absent [from IRS Notice 2020-23] was an extension of the annual funding notices in defined benefit plans, “which still had to be distributed to members and beneficiaries (or postmarked) by April 29, noted Mike Barry, senior consultant at October Three, a pension consulting firm.
Annual Funding Notices are required for all defined benefit plans and must be provided no later than 120 days after the end of each plan year, meaning that for pension plans using a calendar year, the deadline for 2020 remains April 29 (due to leap year). .
Under IRS Notice 2020-18, published on March 18, the grace period for health savings accounts (HSAs), during which employees can still remit money to their HSA for the 2019 tax year, has been extended until July 15, 2020, from April 15, since the deadline for filing returns. Federal revenue is now also July 15. HSA holders can make 2019 contributions into their accounts up to last year’s limits at any time until the new deadline.
The relief also extends until July 15 (from May 31) the 60-day period for account holders to make indirect HSA transfers from one HSA to another. The deadline for plan administrators to report HSA contribution information for 2019 by filing Form 5498-SA with the IRS and providing the information to account holders has also been extended to July 15.
DOL grants additional relief for delays
The DOL has issued guidelines that will facilitate ERISA compliance deadlines, helping benefit plan sponsors, plan members and service providers affected by the coronavirus pandemic.
Good faith efforts
On April 29, DOL’s Employee Benefits Security Administration (EBSA) published the EBSA Disaster Relief Notice 2020-01, extending the deadline for providing benefit statements, annual funding notices, and other notices and disclosures required by ERISA to âas soon as administratively possibleâ in view of the COVID-19 pandemic.
Notice states that a benefit plan will not violate ERISA for failing to distribute a required notice, disclosure or document due between March 1, 2020 and 60 days after the announced end of the national emergency COVID-19, as long as the plan and fiduciary acts in good faith. Good faith efforts include the use of email, text messages, and continuous access websites to share information.
“Under the notice, companies can use alternative electronic means to communicate with plan members and beneficiaries as long as the plan trustee reasonably believes they have convenient access to electronic communication,” Scott said. Hittner, partner and chief actuary at October Three.
Relief is also provided for plan loans, member contributions and loan payment deadlines, provided that employers and service providers act “reasonably, prudently and in the best interests of employees to comply as soon as possible. this is administratively possible in the circumstances â, indicates the opinion.
A new final rule
On May 4, te DOL issued a final rule, Extension of certain time limits for employee benefit plans, participants and beneficiaries affected by the COVID-19 epidemic, in conjunction with the Treasury Department and the IRS. The rule extends certain time limits affecting plan members‘ rights to health care coverage, portability and maintenance of group health plan coverage under COBRA, and it extends the time period for plan members to file claims. claims for benefits or to appeal denied claims.
“In light of the national emergency, departments say employers, employees and dependents may have difficulty meeting standard deadlines with respect to HIPAA, COBRA and claims,” âânoted Brian Gilmore, Senior Benefits Advisor and Vice President at ABD Insurance & Financial Services. in San Mateo, California. “The new final rule extends some of these deadlines to help employers and employees maintain coverage under an employer-sponsored group health plan.”
The DOL has also released a new set of frequently asked questions to help benefit plan members and beneficiaries, plan sponsors and employers affected by the coronavirus outbreak understand their rights and responsibilities under the ‘ERISA.
“EBSA will continue to protect the benefits of American workers while ensuring that employers and plans have the flexibility they need to continue to provide benefits during this difficult time,” said Preston Rutledge, Assistant Secretary of Labor for EBSA.
Challenges for plan administrators
The deadline extensions “will present challenges for employers, plan sponsors, trustees, third party health plan administrators, COBRA administrators and carriers to name a few,” said Lisa Allen, Senior Compliance Consultant at Alera Group, an insurance and financial services company. . The questions of how to administer these extensions “will be far reaching,” she noted, such as determining their impact on procedural processes, record keeping and the adaptability of complaints systems, for example.
Employers should review their summary plan descriptions and plan documents “to determine the impact of these time extensions on the terms of the plan as currently drafted” and seek the advice of legal counsel if any changes are needed, she advised.
Concerns were also expressed by Bobbi Kloss, director of human capital management services at Benefit Advisors Network (BAN), a consortium of health and wellness benefit brokers based in Cleveland. “The DOL tried to clarify things [relating to postponed benefitÂ planÂ deadlines] by posting its COVID-19 FAQs for participants and beneficiaries, with more confusing results and more undefined administrative tasks for HR professionals, “Kloss said.” With the status quo constantly evolving and an unknown as to At the end of the national emergency, employers have another âto doâ to add to their COVID-19 response plan â, in collaboration with their benefit advisers.
She added: âAs information is constantly changing, clear and consistent communication is the only practice an employer should trust. HR needs to be educated and available to respond to employee questions in a timely manner, as the unknown continues to lead to times of stress. for everyone.”
Article related to the SHRM:
DOL temporarily extends COBRA deadlines,
SHRM online, May 2020
Chart: Mandatory Extension of Certain Benefit Plan Deadlines, Poyner Spruill, May 2020