DOL Extends Disaster Relief Timeline for Plans Impacted by Hurricanes

The Department of Labor’s Employee Benefits Security Administration announced extended deadlines and guidance for employee benefit plans, plan sponsors and participants who have been affected by the recent disasters of Hurricane Helene and Hurricane Milton.

The Disaster Relief Notice 2024-01 covers the major disasters declared by President Joe Biden; it begins on the first day of the incident period and ends on May 1, 2025. The Federal Emergency Management Agency established incident periods for different affected areas.

For disaster areas in Florida, the incident period for Hurricane Helene began on September 23, and for Hurricane Milton, the incident period began on October 5.

For disaster areas in North Carolina, South Carolina and Virginia, the incident period began on September 25, and for disaster areas in Georgia, the incident period began on September 24. For disaster areas in Tennessee, the incident period began on September 26.

The guidance applies to employee benefit plans, plan sponsors, labor organizations, plan fiduciaries, participants, beneficiaries and plan service providers subject to the Employee Retirement Income Security Act who were located in a county, tribal area or other geographic area identified for individual assistance by FEMA because of the devastation caused by the covered disasters.

In addition to the relief provided by the notice, the DOL announced an extension of deadlines for furnishing other required notices or disclosures to plan participants and beneficiaries so that employers, plan fiduciaries and plan sponsors have additional time to meet their obligations under Title I of ERISA as a result of the covered disasters.

Plan fiduciaries will not be in violation of ERISA for failure to timely furnish a notice, disclosure or document by May 1, 2025, if the plan and responsible fiduciary act in “good faith” and furnish the notice as soon as administratively practicable under the circumstances. Acting in good faith includes using electronic alternative means of communicating with participants and beneficiaries who the plan fiduciary believes have effective access to electronic means of communication, which includes email, text messages and continuous access to websites, the DOL stated.

Plan Loans and Distributions

According to the DOL notice, if an employee pension benefit plan fails to follow procedural requirements for plan loans or distributions imposed by the terms of the plan, the DOL will not treat it as a failure if:

• The failure is solely attributable to a covered disaster;
• The plan administrator makes a “good-faith, diligent effort” under the circumstance to comply with those requirements; and
• The plan administrator makes a reasonable attempt to correct any procedural deficiencies, such as assembling any missing documentation, as soon as administratively practicable.

Under the SECURE 2.0 Act of 2022, a qualified participant with a plan loan can delay repayment of their outstanding loan by up to one year if the due date would otherwise occur during a period that begins on the first day of the incident period and ends 180 days after the last day of the incident behavior.

The DOL has advised the Department of the Treasury and the IRS that it will not treat any person as having violated Title I of ERISA solely because they complied with these special rules for plan loans.

According to the DOL, it recognizes that some employers and service providers may not be able to forward participant payments and withholdings to employee pension benefit plans within prescribed timeframes due to a covered disaster. In such instances, the DOL will not take enforcement action with respect to a temporary delay in forwarding such payments or contributions to the plan due to a covered disaster.

“Employers and service providers must act reasonably, prudently, and in the interest of employees to comply as soon as administratively practicable under the circumstances,” the notice stated.

PLANSPONSOR’s Ask the Experts column on November 5 addressed the question of whether IRS disaster relief extends to plan sponsors with affected service providers. PLANSPONSOR is a sister publication of PLANADVISER.

Blackout Notices

The DOL has made an exception for administrators of individual account plans who are typically required to provide 30 days’ advance notice to participants and beneficiaries whose rights under the plan will be temporarily suspended, limited or restricted by a “blackout period.”

The regulations provide an exception to providing advanced notice when the inability to provide the notice is “due to events beyond the reasonable control of the plan administrator and a fiduciary.” As a result, the DOL will not require the written determination by a fiduciary pursuant to the regulation for blackout notices, as natural disasters are by definition beyond a plan administrator’s control.

Form 5500s, ERISA Fiduciary Compliance Guidance

The IRS is also providing Form 5500 annual return/report filing relief. Guidance for those impacted by both Hurricane Helene and Hurricane Milton can be found on the IRS website.

In addition, the DOL reminds plan fiduciaries to make “reasonable accommodations” to prevent the loss of benefits or undue delay in benefits payments due to a covered disaster. According to the DOL, fiduciaries should attempt to minimize the possibility of individuals losing benefits because of a failure to comply with pre-established timeframes.

The DOL will continue to monitor the effects of the covered disasters and may respond to the situation as appropriate, which may include providing additional relief, according to the notice.