Department of Labor Issues Guidance to Those Affected by Hurricanes Harvey, Irma and Maria

To help employers, participants and beneficiaries located in areas affected by the Hurricanes Harvey, Irma and Maria the U.S. Department of Labor (DOL) issued guidance (See EBSA Release No. 17-1216-NAT and EBSA Release No. 17-1297-NAT) to employee benefit plans, plan sponsors, employers, employees and service providers addressing verification procedures for plan loans and distributions, participant contributions and loan payments, blackout notices, and group health plan compliance for plans with members affected by the recent hurricanes Harvey, Irma and Maria.

The guidance states that the DOL will work with the Internal Revenue Service (IRS) to provide relief for verification procedures required by retirement plans for plan loans, hardship distributions and benefit distributions.

With regard to employer withholdings, while such withholdings made by employers for contributions or repayment of plan loans are required to be remitted to the plan no later than the 15th business day of the month following the month in which the amounts were withheld or paid, the DOL recognizes that employers or service providers located in disaster areas may not be able to forward such amounts within this time frame. Thus, the DOL has agreed not to penalize plans for a temporary delay in forwarding such payments or contributions to plans, so long as the employers and service providers comply as soon as practical under the circumstances.

Similarly, while plans are required to provide 30 days advance notice to participants and beneficiaries where their rights under the plan will be subject to a blackout period, the DOL has agreed that where the inability to provide the notice is due to the hurricanes, there will be no violation of the blackout notice requirements.

The DOL also recognized that participants and beneficiaries may have difficulty meeting deadlines for filing benefit claims and COBRA elections and directed plans to act reasonably, prudently and in the interest of the workers and their families who rely on the health plans for their well-being. The DOL has directed plans to make reasonable accommodations to prevent the loss of benefits in these cases and to minimize the loss of benefits to individuals due to a failure to comply with time limits.

The IRS has also agreed to provide relief for the untimely filing of Form 5500 Annual Return/Reports for those in affected areas. The IRS also granted individual taxpayers and businesses in affected areas additional time for deadlines falling on or after August 23, 2017 to file through January 31, 2018. Affected taxpayers are advised to contact the IRS regarding any late filing or late penalty notices received.

By Conchita Lozano-Batista | October 4, 2017

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