COVID-19 Employer Playbook

Fiduciary Compliance The notice encourages fiduciaries to make reasonable accommodations to prevent benefit losses or payment delays, and to minimize lost benefits due to failures to comply with “pre- established timeframes.” The DOL’s approach to enforcement will be to emphasize compliance assistance, using grace periods and other relief as appropriate. Form 5500 The notice confirms that Form 5500 filing relief is provided in accordance with previously released IRS guidance. The prior guidance provides that filings otherwise due on or after April 1 and before July 15, 2020, are now due July 15, 2020. However, 5500s for calendar year ERISA plans are still due on July 31, 2020. No extension has been provided for these plans (other than the ability to file a regular Form 5558 Extension request). FAQs for Participants and Beneficiaries EBSA has also issued FAQs addressing retirement benefit questions arising during the COVID-19 pandemic. The FAQs offer general guidance, much of it not unique to the COVID- 19 emergency, regarding topics such as how to file benefit claims, make investment changes, inquire about late payments or statements, or request distributions. The FAQs reference the CARES Act changes that liberalized the plan distribution and loan rules during the pandemic, but they also emphasize the potential tax and other adverse consequences of taking distributions (including the possibility that under some state laws, retirement plan distributions may be viewed as income that affects the ability to receive unemployment compensation). Careful Application of Relaxed Rules 401(k) plan sponsors will want to focus particular attention on the notice and the extent to which its potential relief requires that compliance failures be solely attributable to the COVID- 19 pandemic. Where potential violations could be seen as having multiple causes, it will be important for employers to demonstrate how the pandemic controlled plan operations and not to use the relief measures for purposes other than required by the COVID-19 emergency.

Benefit Plan Terminations

Layoff A layoff involves a termination of employment and automatically triggers entitlement to unemployment benefits. A termination also triggers a COBRA Qualifying Event whereby employees may continue their group health insurance at their own cost. Sometimes employers subsidize a portion of COBRA premiums in the event of a layoff. Furlough By contrast, a furlough is a temporary mandatory period of work without pay or mandatory reduced hours. Typically, employees remain on the employer’s health insurance and other benefit plans during a furlough. The thought process behind a furlough is for the employer to capture immediate cost savings from reduced payroll but to retain employee status for employees. It allows an employer to make a decision to have all employees incur some hardship rather than having some lose their jobs completely. Importantly, a furlough is different from an employment termination action. Employees are typically eligible for unemployment benefits in the event of a furlough or a partial furlough. Employers should check their underlying plan provisions to confirm that contracts permit coverage continuation during a furlough and clarify the outer limits of benefits eligibility for a furloughed employee.


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