DOL Provides 2018 California Wildfires Relief and Guidance for Plan Sponsors and Participants
On Nov. 20, 2018, the Employee Benefits Security Administration of the DOL (the Department) released compliance guidance (which includes limited relief) and participant FAQs addressing California wildfire issues. The Department recognizes that many parties may encounter compliance-related issues in the coming months related to their ERISA-covered plans. Specifically, the compliance guidance is meant to help employee benefit plans, plan sponsors, employers and employees that are located in counties identified as a covered disaster area due to the California wildfires. The guidance is as follows:
If an employee pension benefit plan fails to follow procedural requirements for plan loans or distributions imposed by the terms of the plan, the Department will not treat it as a failure if it satisfies all of the following conditions:
- The failure is solely attributable to the California wildfires
- The plan administrator makes a good-faith, diligent effort under the circumstances to comply with procedural requirements
- The plan administrator makes a reasonable attempt to assemble any missing documentation as soon as practicable
In addition, the Department will not seek to enforce plan asset timing rules provided the failure is attributable to the California wildfires. (Note that participant contributions and loan repayments must be forwarded to the plan as soon as possible, but no later than the 15th business day of the month following the month they were transferred to the employer.)
Normally, an administrator of an individual account plan is required to provide 30 days advance notice to participants whose rights will be temporarily suspended or limited by a period of at least three business days when they cannot direct investments, obtain loans or other distributions. Natural disasters, like the California wildfires, are beyond the control of a plan administrator. Therefore, if the lack of notice is attributable to the wildfires, then it would not be an ERISA violation.
The Department recognizes that plan participants may encounter difficulties meeting deadlines for filing benefit claims and COBRA elections due to wildfires. Plan sponsors are to act reasonably, prudently and in the interest of the workers and their families. Reasonable accommodations should be made to minimize loss of benefits due to timing failures.
Finally, the Department understands that timely compliance by group health plans may not be possible. Therefore, the Department’s enforcement emphasis will be on compliance assistance and will include grace periods and other appropriate relief.
The Department also provides FAQs for participants and beneficiaries related to health and retirement plans. It addresses issues participants may face (e.g., having an employer close, being unable to contact the plan administrator, or wishing to withdraw retirement funds without penalty due to the fires).