DOL Issues Employee Benefit Plan Compliance Guidance for Hurricane Sandy | Practical Law

DOL Issues Employee Benefit Plan Compliance Guidance for Hurricane Sandy | Practical Law

The Department of Labor's (DOL) Employee Benefits Security Administration (EBSA) has issued an announcement providing guidance for Hurricane Sandy-impacted employee benefit plans, plan sponsors and service providers, in connection with employee benefit plans covered by the Employee Retirement Income Security Act of 1974 (ERISA).

DOL Issues Employee Benefit Plan Compliance Guidance for Hurricane Sandy

Practical Law Legal Update 3-522-5658 (Approx. 3 pages)

DOL Issues Employee Benefit Plan Compliance Guidance for Hurricane Sandy

by PLC Employee Benefits & Executive Compensation
Published on 21 Nov 2012 • USA (National/Federal)
The Department of Labor's (DOL) Employee Benefits Security Administration (EBSA) has issued an announcement providing guidance for Hurricane Sandy-impacted employee benefit plans, plan sponsors and service providers, in connection with employee benefit plans covered by the Employee Retirement Income Security Act of 1974 (ERISA).
On November 20, 2012, the DOL's Employee Benefits Security Administration (EBSA) issued a three-page announcement providing guidance about compliance with employee benefit plan rules for Hurricane Sandy-impacted employee benefit plans, plan sponsors and service providers to employers located on October 26, 2012 in one of the counties or Tribal Nations that have been identified as covered disaster areas. Covered disaster areas are identified as federally declared disaster areas on the IRS site Help for Victims of Hurricane Sandy.
The announcement provides guidance on the following compliance issues:
  • Plan Loans and Distributions Verification Procedures. The DOL will not treat any person as having violated the provisions of Title I of ERISA solely because they relied on IRS Announcement 2012-44, which provided relief from certain verification procedures required under retirement plans for:
    • plan loans to participants and beneficiaries;
    • hardship distributions; and
    • other pension benefit distributions.
    For more information on IRS Announcement 2012-44, see Legal Update, IRS Relief for Retirement Plan Participants Affected by Hurricane Sandy.
  • Participant Contributions and Loan Repayments. If Hurricane Sandy resulted in a temporary delay in the forwarding of loan repayments and participant contributions to an employee pension benefit plan, the DOL may not enforce the provisions of Title I of ERISA requiring timely contributions, to the extent that affected employers and service providers comply as soon as is practicable under the circumstances.
  • Blackout Notices. The DOL will not allege a violation of the blackout notice requirements for Hurricane Sandy-related blackout periods, solely on the basis that a fiduciary did not make the required written determination.
  • ERISA Group Health Plans. The DOL acknowledges that Hurricane Sandy may have prevented participants and beneficiaries from meeting filing deadlines for certain group health plan requirements, including those involving benefit claims and COBRA elections. Plans must act reasonably and prudently, in the interest of the participants and beneficiaries, and should make reasonable accommodations to prevent the loss of benefits because of a failure to comply with these timeframes.
    Also, citing a FAQ from the health care reform context, the DOL suggested that group health plans and insurers might be permitted enforcement relief (such as a grace period) when special circumstances, such as hurricane-related damage to a plan's or service provider's principal place of business, makes compliance with existing deadlines for claims decisions or disclosure impossible.
For more information on IRS Announcement 2012-44, see Legal Update, IRS Relief for Retirement Plan Participants Affected by Hurricane Sandy.
The DOL and the IRS will continue to monitor the situation and address issues to assist individuals, employers and plan sponsors in recovery. Further guidance will be forthcoming.