US Department of Labor issues compliance guidance for employee benefit plans in wake of Oklahoma tornado

WASHINGTON – Assistant Secretary of Labor for Employee Benefits Security Phyllis C. Borzi today announced the following guidance on compliance with employee benefit plan rules for those adversely impacted by the Moore, Oklahoma tornado:

The U.S. Department of Labor understands that as the practical and personal implications of the Oklahoma tornado unfold, plan fiduciaries, employers, labor organizations, service providers, participants and beneficiaries may encounter compliance-related issues over the next few months in connection with employee benefit plans covered by the Employee Retirement Income Security Act.  The guidance provided in this statement applies to employee benefit plans, plan sponsors and service providers to such employers, located in one of the counties that have been identified as covered disaster areas because of the devastation caused by the Oklahoma tornado that occurred on May 20, 2013.  Covered disaster areas are identified as federally declared disaster areas in the news releases issued by the Internal Revenue Service for victims of the Oklahoma tornado, which can be found at www.irs.gov/uac/Newsroom/IRS-Gives-Tax-Relief-To-Oklahoma-Tornado-Victims;-Return-Filing-and-Tax-Payment-Deadlines-Extended-to-Sept.-30.

The relief provided under this announcement is in addition to the Form 5500 Annual Return/Report filing relief already provided by the IRS pursuant to news release IR-2013-53 under § 7508A of the Internal Revenue Code for victims of the Oklahoma tornado. See the regulations under § 7508A and Section 8 of Rev. Proc. 2007-56, 2007-34 I.R.B. 388.

Participant Contributions and Loan Repayments

In accordance with 29 CFR § 2510.3-102, amounts that a participant or beneficiary pays to an employer or amounts that a participant has withheld from his or her wages by an employer for contribution or repayment of a participant loan to an employee pension benefit plan constitute plan assets, and thereby are required to be forwarded to the plan, on the earliest date on which such amounts can reasonably be segregated from the employer’s general assets, but in no event later than the fifteenth business day of the month following the month in which the amounts were paid to or withheld by the employer.

The department recognizes that there may be some employers and service providers acting on employers’ behalf, such as payroll processing services, located in covered disaster areas who will not be able to forward participant payments and withholdings to employee pension benefit plans within the prescribed timeframe.  In such instances, the department will not, solely on the basis of a failure attributable to the Oklahoma tornado, seek to enforce the provisions of title I with respect to a temporary delay in forwarding such payments or contributions to an employee pension benefit plan to the extent that affected employers and service providers act reasonably, prudently and in the interest of employees to comply as soon as practicable under the circumstances.  The IRS has informed the department that, subject to the foregoing conditions, it will not seek to assess an excise tax with respect to a prohibited transaction under section 4975 of the Code resulting solely from such a temporary delay.

ERISA Disclosures

Title I of ERISA requires various disclosures and notices to participants, beneficiaries and others by employee benefit plan administrators, fiduciaries, and others.  The due dates for many of these disclosures or notices could fall within the timeframe (May 18 through Sept. 30) covered by the IRS relief including, for example, blackout notices, participant-level fee disclosures, pension benefit statements, annual funding notices and summary annual reports.  The department will not seek to enforce disclosure timeliness requirements when a failure is due to events reasonably beyond the control of the plan administrator or fiduciary if they act prudently under the circumstances and comply as soon as practical.  Natural disasters, by definition, are beyond the control of a plan administrator or fiduciary.

ERISA Group Health Plan Compliance Guidance

The department recognizes that plan participants and beneficiaries may encounter an array of problems due to the Oklahoma tornado, such as difficulties meeting certain deadlines for filing benefit claims and COBRA elections.  The guiding principle for plans must be to act reasonably, prudently, and in the interest of the workers and their families, who rely on their health plans for their physical and economic well-being.  Plan fiduciaries should make reasonable accommodations to prevent the loss of benefits in such cases and should take steps to minimize the possibility of individuals losing benefits because of a failure to comply with pre-established timeframes.

Moreover, the department acknowledges that there may be instances when full and timely compliance by group health plans and issuers may not be possible. As stated previously, see www.dol.gov/ebsa/faqs/faq-aca.html, our approach to enforcement continues to be marked by an emphasis on compliance assistance and includes grace periods and other relief, where appropriate, including when physical disruption to a plan or service provider’s principal place of business by the Oklahoma tornado makes compliance with pre-established timeframes for certain claims decisions or disclosures impossible.

Contact Information

The department will continue to monitor the situation to address employee benefit plan issues that are most important in helping individuals, employers, and plan sponsors. Further guidance will be forthcoming. For more information on Oklahoma tornado relief under ERISA, contact the department's Employee Benefits Security Administration online at www.askebsa.dol.gov or by calling 1-866-444-3272. Questions about IRS guidance should be directed to the IRS at 1-877-829-5500.

U.S. Department of Labor news materials are accessible at www.dol.gov. The information above is available in large print, Braille, audio tape or disc from the COAST office upon request by calling 202-693-7828 or TTY 202-693-7755.