Seyfarth Synopsis: The SARS CoV-2 virus ("coronavirus") has been declared a global pandemic by the World Health Organization. It's fair to say that none of us have ever experienced a pandemic, or at least not on this level. So how this outbreak will impact our daily lives is yet to be fully understood, and is evolving day-to-day. As employee benefit counsel, we know that there are certain filing and disclosure deadlines coming up. It's been reported that the IRS is preparing to extend the April 15 income tax filing deadline, so that raises the question – what other upcoming IRS, DOL or retirement plan deadlines might also need to be extended?
As we are seeing, the impact of the coronavirus is far-reaching. Employees are asking to (or being asked to) work from home, schools are closing for extended periods, restrictions on public gatherings and events are in place and necessities are flying off store shelves. While the government's immediate concerns focus on paid sick leave, relief for hourly workers, food assistance, access to and coverage of the cost of coronavirus testing, and enhanced unemployment insurance, there are a number of items relating to employer-sponsored retirement plans to keep in mind as we navigate this unprecedented situation:
- End of Initial Remedial Amendment Period for 403(b) Plans. Tax-exempt employers have until March 31, 2020 to adopt an IRS pre-approved 403(b) plan document or adopt a custom plan document to fix any plan document errors retroactively to 2010. This is a one-time "free-pass" so to speak. After that deadline passes, any document errors will need to be corrected under the IRS's Voluntary Correction Program, which requires payment of a fee and possible other sanctions. So this is an immediate deadline that the IRS can (and should) defer. Hopefully we'll hear from then soon about this one.
- Close of IRS Determination Letter Program Window for Hybrid Plans. Last year, the IRS issued guidance re-opening its determination letter program to hybrid plans (e.g., cash balance plans and pension equity plans) for a limited 12-month period. That period is set to expire on August 31, 2020. It's unclear at this point whether the IRS would consider extending this limited submission window.
- SECURE Act Guidance. The SECURE Act contains a number of provisions impacting employer-sponsored retirement plans, many of which are already in effect. There are many unanswered questions about how to actually administer the changes and incorporate them into existing employer-sponsored retirement plans, and additional guidance is needed. Our understanding is that Treasury is working on guidance. However, it is unclear at this point what, if any, impact the coronavirus outbreak will have on this process, as potential government office closures loom and resources are shifted to focus on more immediate virus-related relief.
- Retirement Plan Periodic Notice and Filing Requirements. Retirement plans are subject to numerous notice and filing requirements, including annual fee notices and annual Form 5500 filing requirements. While some of the deadlines for sending such notices or making such filings are a ways down the road, if offices are to close or business operations otherwise disrupted, it would be a good idea for the IRS and DOL to extend notice and filing deadlines well in advance. For example, if the commencement of the annual independent audit for qualified retirement plans is delayed, will the reports be ready for filing with the annual Form 5500? For that matter, will the Form 5500 itself be ready in time for filing?
- Qualified Disaster Relief. In the past, the IRS has provided disaster relief for victims of certain hurricanes, wildfires and other natural disasters which have manifested themselves as a physical scorch on the earth. This relief has generally included an increased limit for plan loans, as well as the availability of qualified distributions up to a certain amount without the 10% early withdrawal penalty (and the ability to recontribute such distributions for a period of time after the distribution). It is unclear whether IRS will issue similar disaster relief for those impacted by the coronavirus.
- Currently Under Audit? What should you do if your retirement plan is currently under an IRS or DOL audit and you are unable to meet the agency's response deadline? The first thing that you should do is to drop the agent working on your case a note. You could call and leave a voicemail, but we prefer our clients documenting such a communication in writing. We are confident that neither the IRS nor DOL agent you are working with will strictly enforce any response deadlines in this current environment, but it would be nice if the agencies issued some announcement to that effect. Perhaps they will shortly. We can be assured that both the IRS and DOL are wrestling with this pandemic just as we all are.
So there are many other questions and few or no immediate answers. We will be monitoring this situation and will be sure to communicate any developments that arise. In the meantime, we extend our best wishes to all our readers as the current situation unfolds.
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