The Internal Revenue Service (IRS) on May 28, 2020, postponed deadlines for certain employee benefit plans, including some defined benefit plans, individual retirement arrangements (IRAs) and health savings accounts (HSAs), because of the COVID-19 crisis through the release of Notice 2020-35. The Notice postpones deadlines for the “time-sensitive actions” it describes, which were due to be performed on or after March 30, 2020, and before July 15, 2020. The Notice postpones the deadline for these actions to July 15, 2020, unless a different deadline is specified. Below is a summary of its key provisions relevant to employers and plan sponsors.
Time-Sensitive Actions Postponed to July 15, 2020
- For a defined benefit pension plan that is not a multiemployer plan, an application for a funding waiver due to business hardship.
- With respect to a multiemployer defined benefit pension plan, the following actions:
- certification of the multiemployer plan’s funded status and the Notice to interested parties of such certification
- adoption of, and the notification to the bargaining parties of the schedules under, a funding improvement plan or rehabilitation plan
- annual update of a funding improvement plan and its contribution schedules, or rehabilitation plan and its contribution schedules, and the filing of such updates with the plan’s Form 5500
- The filing of Form 5330, relating to employee benefit plan excise taxes, and the payment of the associated excise taxes. The IRS will disregard the period beginning on March 30, 2020, and ending on July 15, 2020, in calculating any interest or penalty for failure to file Form 5330 or to pay the excise tax postponed by the Notice. Interest and penalties with respect to such postponed filing and payment obligations will begin to accrue on July 16, 2020.
- With respect to the IRS Employee Plans Compliance Resolution System (EPCRS) and a compliance statement issued under the Voluntary Correction Program (VCP), implementation of all corrective actions, including adoption of corrective amendments required by the compliance statement.
- For defined benefit plans, requests for approval of a substitute mortality table for 2021.
Additional Postponed Time-Sensitive Actions
- Regarding preapproved defined benefit plans, the deadline for the following actions is postponed until July 31, 2020:
- adoption of an amended and restated pre-approved defined benefit plan
- submission of a determination letter application under the second six-year remedial amendment cycle
- correction of plan disqualifying provisions during the remedial amendment period that would otherwise have ended on April 30, 2020
- The Notice postpones the due date for filing and furnishing Form 5498 for IRAs and Form 5498-SA for HSAs to August 31, 2020. The IRS will disregard the period beginning on the original due date of the form and ending on August 31, 2020, in the calculation of any penalty for failure to file the forms. Penalties with respect to a postponed filing will begin to accrue on September 1, 2020.
- With respect to the remedial amendment period and plan amendment rules for Code Section 403(b) plans, the deadline for actions that would otherwise have been required to be performed by March 31, 2020, with respect to form defects or plan amendments, is postponed to June 30, 2020.
