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DOL gives retirement plans and participants hurricane relief 

November 19, 2024

 

Department of Labor (DOL) Notice 2024-01 gives retirement plan sponsors and service providers affected by hurricanes Helene and Milton extra time to provide required notices and disclosures and to complete certain other plan-related actions. The notice also provides relief from ERISA’s plan loan requirements for loans issued or payments suspended under the disaster relief provision in the SECURE 2.0 Act (Div. T of Pub. L. No. 117-328). A separate joint DOL and Treasury Department notice gives participants and beneficiaries more time to file benefit claims and appeal adverse benefit determinations; the joint notice also extends several other deadlines for health plans and their participants. (These pieces of relief are in addition to previously announced extensions from IRS; see Retirement plan sponsors and participants get hurricane relief (Oct. 11, 2024).) In addition, DOL has issued a set of FAQs to help retirement and health plan participants, beneficiaries and sponsors understand their ERISA rights and responsibilities. This article focuses on the relief for retirement plans; a separate GRIST will review provisions for health and welfare plans.

Scope and timing of hurricane relief

Notice 2024-01’s relief — which is substantively similar to DOL’s 2020 pandemic relief — applies to plans, sponsors, fiduciaries, service providers, participants and beneficiaries located in geographic areas  that the president has declared major disaster areas eligible for individual assistance from the Federal Emergency Management Agency (FEMA) due to hurricanes Milton and Helene (including tropical storm Helene). The notice applies during the “relief period,” defined as the period beginning on the corresponding incident period for affected areas — which varies by storm and state — and ending May 1, 2025. Covered geographic areas include all of Florida, Georgia, North Carolina, South Carolina, and parts of Tennessee and Virginia.

Relief for required notices and disclosures

Under Notice 2024-01, a plan and its responsible fiduciary won’t be treated as violating ERISA for failing to deliver any ERISA notice or disclosure due during the relief period, as long as they make a good-faith effort to deliver the notice or disclosure “as soon as administratively practicable.” Plan sponsors may not rely on this to relief to delay notices indefinitely but won’t be penalized if circumstances make meeting delivery deadlines impossible during the relief period.
  • E-delivery allowed
    As part of a good-faith effort to deliver required documents, a plan sponsor or administrator may use electronic-delivery methods, such as text messages, emails or websites, as long as the plan fiduciary reasonably believes recipients have effective access to those communication channels. Sponsors and administrators can apparently use electronic delivery, even if that method wouldn’t satisfy DOL’s current rules.
  • Notices and disclosures covered

    The relief applies to all notices and disclosures (except those addressed in the DOL and Treasury Department joint notice) required under ERISA Title I and subject to DOL’s interpretive and regulatory authority. For retirement plans, these documents include but are not limited to the following:

    • Notices and disclosures that typically apply to all retirement plans, including individual benefit statements, statements of accrued and vested benefits for terminated participants, summary plan descriptions (SPDs) and summaries of material modifications (SMMs)
    • Notices and disclosures that typically apply to defined contribution plans, including the notice of blackout periods, the qualified default investment alternative (QDIA) notice, the automatic contribution arrangement notice, the plan and investment fee disclosures, and the summary annual report
    • Notices and disclosures that typically apply to defined benefit plans, including the annual funding notice, the notice of significant reduction in future benefit accruals (ERISA Section 204(h) notice), the notice of funding-based benefit restrictions under Internal Revenue Code Section 436 and the suspension of benefits notice

    See DOL’s Reporting and disclosure guide for employee benefit plans for a comprehensive list of retirement plan notices and disclosures.

Relief for other plan-related activities

Notice 2024-01 also provides relief from certain requirements for remitting participant contributions and loan repayments, verifying that loans and distributions conform to plan terms, and providing advance notice of blackout periods.
  • Participant contributions and loan repayments
    DOL won't pursue enforcement action against an employer for a temporary delay — due solely to the covered disasters — in forwarding participant contributions or loan repayments to a plan. This usually must occur on the earliest date these amounts can reasonably be segregated from the employer's general assets (but not later than the 15th business day of the month after the month in which the amounts were paid to or withheld by the employer). However, employers and service providers still must act reasonably, prudently and in the interest of employees to forward amounts as soon as practicable under the circumstances.
  • Verification procedures for loans and distributions
    DOL will not treat a plan as failing to follow its procedural requirements for plan loans and other distributions if the failure is solely attributable to the covered disasters, and the plan administrator makes a good-faith, diligent effort under the circumstances to comply with the requirements. The administrator must also make a reasonable attempt to correct any deficiencies (e.g., assembling missing documentation) as soon as administratively practicable. This relief applies only to verification requirements under ERISA Title I but not to any procedural requirements enforced by Treasury or IRS (e.g., obtaining spousal consent).
  • Blackout notices
    ERISA requires the plan administrator of an individual account plan to provide 30 days’ advance notice of a blackout period suspending participants’ ability to direct investments or obtain plan loans or other distributions. An exception applies when a plan fiduciary determines in writing that events beyond the administrator’s reasonable control prevent advance notice. The relief for participant disclosures discussed above applies to blackout notices, and DOL won't require a written determination from a fiduciary to qualify for the exception to the advance notice requirement.

SECURE 2.0 plan loan relief

SECURE 2.0 allows sponsors of 401(k), 403(b) and governmental 457(b) plans (but not money purchase pension plans) to offer special plan loan relief to participants affected by natural disasters. Plans can double the maximum allowable plan loan — to the lesser of $100,000 or 100% of the vested benefit — during the 180-day period that begins on the first day of the incident period or, if later, the date of the disaster declaration. Plans can also suspend for up to one year plan loan repayments owed by affected participants during the incident period and 180 days immediately afterward. For more information on SECURE 2.0’s disaster relief, see Retirement plan sponsors and participants get hurricane relief (Oct. 11, 2024).

ERISA requires plan loans to be available on a reasonably equivalent basis and adequately secured, with no more than 50% of a participant’s account used as security. DOL will not treat a plan as violating ERISA’s plan loan requirements solely because a plan has made loans or suspended loan repayments under SECURE 2.0’s disaster relief provision.

Fiduciary compliance guidance

Notice 2024-01 explains DOL’s general enforcement approach during relief period. To prevent loss or undue delay of benefits due to failure to meet established deadlines, the notice advises plan officials to make “reasonable accommodations” for participants and beneficiaries adversely affected by the covered disasters. But DOL understands that plans and service providers may not be able to fully comply with requirements for claims processing and other actions required by ERISA. The agency will emphasize compliance assistance (rather than penalties) and provide grace periods and other relief when appropriate.

Joint notice extends time to file claims and appeals

The joint notice requires retirement plans to extend the deadline for participants and beneficiaries affected by the covered disasters to take action under a plan’s claims procedures, even if the sponsor isn’t located in an affected region. Plan sponsors and administrators must disregard the relief period when determining affected participants’ and beneficiaries’ deadlines for filing initial claims and appealing adverse benefit determinations.

  • Example. On Oct. 15, a participant affected by one of the covered disasters received a notice of an adverse benefit determination, with 60 days to file an appeal. The participant ordinarily would have to file the appeal by Dec. 14. However, under the relief, the 60-day appeal period begins after the relief period ends, so the participant has until June 30 to appeal.

Because the incident periods for affected areas began more than a month before publication of the joint notice, plan officials may need to determine whether any claims or appeals previously denied as untimely are eligible for the relief.

  • Example. On Aug. 15, a participant in North Carolina received a notice of an adverse benefit determination, with 60 days to file an appeal. The participant ordinarily would have to file the appeal by Oct. 14. The participant filed the appeal on Oct. 31, and the plan administrator denied it as untimely. Under the relief, the time period from the beginning of the incident period — Sept. 25 for North Carolina — until May 1 must be disregarded for the 60-day appeal period, so the administrator must now accept the participant’s appeal.

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About the author(s)
Matthew Calloway
Margaret Berger

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