The Department of Labor (DOL) has announced that it is providing guidance and relief for victims of California’s Camp, Hill, Woolsey and other wildfires.
The DOL says that it “recognizes that these wildfires may impede efforts by plan fiduciaries, employers, labor organizations, service providers and participants and beneficiaries to comply with the Employee Retirement Income Security Act (ERISA) over the next few months.”
The guidance generally applies to employee benefit plans, plan sponsors, employers and employees, and service providers to employers that were located in a county or tribal area identified now or in the future for individual assistance by the Federal Emergency Management Agency (FEMA) because of the 2018 California Wildfires. Information on the counties and areas included is available on FEMA’s website.
The guidance and relief the DOL is providing concerns the following:
Verification Procedures for Plan Loans and Distributions. If a pension plan fails to follow procedural requirements for plan loans or distributions under the terms of the plan, the Department will not treat it as a failure if it is solely attributable to the wildfires, the plan administrator makes a good-faith diligent effort under the circumstances to comply with those requirements, and the plan administrator makes a reasonable attempt to assemble any missing documentation as soon as practicable.
Participant Contributions and Loan Repayments. If an employer or service provider located in a covered disaster area is not able to forward participant payments and withholdings to pension plans within prescribed time frames, the DOL will not take action against them; however, the DOL says that affected employers and service providers must act reasonably, prudently and in the interest of employees to comply as soon as practicable under the circumstances.
Blackout Notices. The DOL notes that regulations provide an exception to the requirement that participants and beneficiaries be given 30 days’ advance notice when their rights under the plan will be temporarily suspended, limited or restricted by a blackout period. That exception kicks in when the inability to provide the notice is due to events beyond the reasonable control of the plan administrator and a fiduciary so determines in writing. The DOL says that for blackout periods related to the wildfires, it will not require a fiduciary determination, “as natural disasters are by definition beyond a plan administrator’s control.”
ERISA Claims Compliance Guidance. The DOL says that it recognizes that affected plan participants and beneficiaries may encounter problems due to the wildfires. “The guiding principle for plans,” says the DOL, “must be to act reasonably, prudently and in the interest of the workers and their families who rely on their health, retirement, and other employee benefit plans for their physical and economic wellbeing.”
The DOL says that plan fiduciaries should make “reasonable accommodations to prevent the loss of benefits or undue delay in benefits payments in such cases” and also should try to minimize the possibility of that individuals could lose benefits due to a failure to comply with pre-established time frames.
The DOL also acknowledges that there may be instances when plans and service providers may be unable to comply fully and on time with claims processing requirements. It says that in enforcing them, it will emphasize compliance assistance and include grace periods and other relief when appropriate, including when physical disruption to a plan or service provider’s principal place of business makes it impossible to comply with pre-established timeframes for certain claims’ decisions or disclosures.
Filing Relief. The DOL says that Form 5500 relief is provided in accordance with what the IRS announced. The IRS granted relief concerning the filing of Form 5500 series returns that had to be filed on or after Nov. 8, 2018 and before April 30, 2019, in the manner described in section 8 of Rev. Proc. 2007-56. The relief described in section 17 of Rev. Proc. 2007-56, pertaining to like-kind exchanges of property, also applies to certain taxpayers that are not otherwise affected taxpayers and may include acts required to be performed before or after the period above.