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DOL Announces Relief for Plans Affected by Recent Hurricanes

The Department of Labor announced Oct. 29 that it has published employee benefit plan compliance guidance and relief for victims of recent Hurricanes Florence and Michael.

The relief includes easing of enforcement concerning the rules governing plan loans and distributions, as well as relief regarding filing the Form 5500.

The American Retirement Association had requested such relief in an Oct. 4, 2018 letter to the IRS.

The damage caused by Hurricane Florence, the ARA said in its letter, “resulted in significant hardships for taxpayers, plan sponsors and their service providers who reside in the affected area,” and requested relief for taxpayers who would like to use assets in their qualified retirement plans to alleviate hardships Florence caused, patterned after the relief the IRS announced in the wake of Hurricane Sandy, and an extension of Form 5500 filing deadlines.

The IRS had announced additional relief for victims of Hurricane Florence on Oct. 17, including a further extension of the Form 5500 filing deadline. The DOL has now followed suit, stating in its Oct. 29 announcement that it is providing Form 5500 filing relief “in accordance with Hurricane Florence and Hurricane Michael Internal Revenue Service news releases.”

Regarding use of assets from retirement plans, the DOL says that it will not treat an employee pension benefit plan as failing to follow procedural requirements for plan loans or distributions under the terms of the plan if that failure is due to either hurricane — as long as the plan administrator makes a good-faith diligent effort to comply and “a reasonable attempt to assemble any missing documentation as soon as practicable.” The DOL also says that it will not take enforcement action if an employer or service provider fails to forward participant payments and withhholding to pension plans on time, if they cannot do so due to either hurricane.

The DOL also announced that it will not allege a violation of the blackout notice requirements solely on the basis that a fiduciary did not make the required written determination due to Hurricane Florence or Hurricane Michael.

Additionally, the DOL says that it recognizes that the problems occasioned by the hurricanes may make it difficult to act reasonably, prudently, and in the interest of the workers and their families, and that plan fiduciaries should make reasonable accommodations to prevent the loss of or undue delay in payment of benefits and take steps to minimize the possibility of individuals losing benefits because the plan could not comply with pre-established time frames. And it acknowledges that full and timely compliance with claims processing requirements may not be possible, and that it will emphasize compliance assistance and grace periods and other relief when appropriate.

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