Seyfarth Synopsis: On April 9, 2020, the IRS issued Notice 2020-23, extending federal tax filing deadlines and payment obligations to July 15, 2020 for certain items otherwise due to be performed from April 1, 2020 through July 14, 2020. Notice 2020-23 extends the period for performing 44 “time-sensitive” employee benefit-related actions.

These time-sensitive actions were previously identified under Revenue Procedure 2018-58, which provides a standing list of actions for which the IRS can trigger extended deadlines in times of federally declared natural disasters or military actions, many of which are related to employee benefits matters (the “EB Time Sensitive Actions”). Notice 2020-23 provides a delayed deadline to July 15, 2020 for EB Time Sensitive Actions that would otherwise be due to be performed from April 1, 2020 through July 14, 2020 (the “Extension Period”), some of which are described below. Unlike the CARES Act relief, an individual (or plan sponsor) does not need to show that he or she was adversely impacted by COVID-19 in order for the Extension Period to apply to the EB Time Sensitive Actions. The scope of the relief is broad, including relief for defined contribution and defined benefit plans, ESOPs, welfare plans, and individual plan participants. The PBGC issued similar relief for certain plan filings in concert with the IRS.

  • Relief for Defined Contribution Plan Acts. The Notice covers a number of defined contribution plan-related acts that may be postponed until July 15, 2020 including:
    • The 60-day window to roll over distributions from an eligible retirement plan (including an IRA) has been extended to July 15, 2020 if the deadline otherwise expired or will expire during the Extension Period. This may be helpful for participants who received a 2020 required minimum distribution before April 1, 2020 and would like to roll it over to an eligible retirement plan but are outside of the 60-day rollover period.
    • As described in a prior blog post, the CARES Act generally allows certain qualified individuals adversely impacted by COVID-19 to suspend loan repayments until the end of 2020. The relief provided by the Notice allows all participants, not just those impacted by COVID-19, to suspend until July 15, 2020 any loan repayments that are otherwise due during the Extension Period. Of course, any loan under which repayments are suspended during the Extension Period will need to be caught up or otherwise re-amortized once repayments re-commence.
    • The April 15, 2020 deadline for distributing 2019 excess deferrals (plus earnings) identified by the plan administrator or timely identified by the participant (by March 1st) has been extended until July 15, 2020.
    • The 90-day period for electing a permissive withdrawal of automatic contributions under an eligible automatic contribution arrangement, or EACA, is postponed until July 15, 2020, provided the deadline for making this election otherwise falls within the Extension Period.
  • ESOP-Specific Relief. Notice 2020-23 also postpones various deadlines for certain ESOP-specific administrative tasks until July 15, 2020, if the deadline would have otherwise expired during the Extension Period. The extension applies to the timing of elections and processing of distributions to former employees, repurchases of stock distributed by the ESOP and statutory diversification, as well as distribution of pass-through dividends and capital gains deferral elections for shareholders who sell stock to an ESOP.
  • Welfare Plans. While the Notice covers several welfare plan-related time sensitive items, much of the relief relates to plan year deadlines for cafeteria plans and flexible spending accounts, which typically operate on a calendar year and as a result are outside the Extension Period. Those situations eligible for relief under the Notice are therefore more unique.
  • PBGC Relief. Following the IRS’ lead in delaying certain deadlines, the PBGC also has provided relief under its disaster relief policy. PBGC premiums, reporting for unfunded defined benefit pension plans under ERISA 4010 and most other filings that are not expressly excepted, which are otherwise due during the Extension Period, are now also due on July 15, 2020. There are items on an “exceptions list” that are not covered by this relief, which filings include important or time-sensitive information involving the possibility of a high risk of significant harm to participants or to the PBGC’s insurance program. These items include, among others, advance notice of a reportable event under ERISA 4043, notices of large missed contributions, post-reportable event notices under ERISA 4043 and certain actions in connection with distress terminations. For those items on the “exceptions list,” filers may seek individual exceptions.

This deadline extension relief provides much needed clarification regarding upcoming tax and employee benefit-related deadlines. While we would all prefer to be back to work and back to our normal daily lives as soon as possible, we will continue to monitor these deadlines as it’s always possible that the IRS will grant further relief. In the meantime, continue to observe recommended safe distancing and face mask protocols, and stay safe.