Posted by Christopher J. Ciminera, CPA, QKA
On Tuesday, April 28 my blog, “How Do I Correct Late Salary Deferral Deposits?,” was posted. Coincidentally, the very next day the Employee Benefits Security Administration (EBSA) Disaster Relief Notice 2020-01 was posted. In this notice, the EBSA provides relief to plan sponsors regarding the possibility of lags in deposits due to the recent COVID-19 issues. The recent guidance supports my position in my previous blog that a lag in deposit due to COVID-19 issues wouldn’t necessarily be considered a prohibited transaction. It is important to note that the guidance mentions a specific time period from the beginning on March 1, 2020 and ending on the 60th day following the announced end of the national emergency that would fall within this guidance. The notice specifically indicates that the DOL “will not – solely on the basis of a failure attributable to the COVID-19 outbreak – take enforcement action with respect to a temporary delay in forwarding such payments or contributions to the plan.” As has always been the case but still expressed in the notice by the EBSA, “employers and service providers must act reasonably, prudently, and in the interest of employees to comply as soon as administratively practicable under the circumstances.”
The EBSA Notice 2020-01 does provide some needed peace of mind to plan sponsors in these extraordinary times and late salary deferral deposits is just one of the relief allocations addressed in the notice. Stay tuned for a future post for additional information.