Yes. The Department of Labor (DOL) has taken a temporary non-enforcement position on retirement plan loan and distribution procedural deficiencies. Under the Notice, retirement plans that do not follow procedural requirements for plan loans or distributions imposed by the terms of the plan, will not be treated as in violation of Title I of ERISA if:
- the failure is solely attributable to the COVID-19 outbreak;
- the plan administrator makes a good-faith diligent effort under the circumstances to comply with those requirements; and
- the plan administrator makes a reasonable attempt to correct any procedural deficiencies, such as assembling any missing documentation, as soon as administratively practicable.
The relief is limited to the DOL's authority under Title I of ERISA and does not extend to Title II of ERISA, which contains provisions analogous to those under the Internal Revenue Code and subject to the jurisdiction of the IRS, such as the spousal consent rules for distributions.
The Notice provides that an employee pension benefit plan may be amended to provide the relief for plan loans and distributions described in Section 2202 of the CARES Act, and the DOL will treat the plan as being operated in accordance with the terms of the amendment prior to its adoption, if:
- the amendment is made on or before the last day of the first plan year beginning on or after January 1, 2022, or such later date prescribed by the Secretary of the Treasury, and
- the amendment meets the conditions of Section 2202(c)(2)(B) of the CARES Act.