EBSA Notice 2020-01 from the Employee Benefits Security Administration (EBSA) announced important relief for plan sponsors in connection with authorizing plan loans and distributions
The guidance does provide that if an ERISA- plan fails to follow procedural requirements for plan loans or distributions under the terms of the plan, the Department of Labor (DOL) will not treat it as a failure if the failure is solely because of Coronavirus; the plan administrator makes a good faith, diligent effort under the circumstances to comply with those plan requirements; and the plan administrator makes a reasonable attempt to correct any procedural deficiencies as soon as practicable. The relief for verification procedures is limited to those procedures required under ERISA and within the jurisdiction of the DOL.
The guidance also provides some important relief from ERISA’s fiduciary requirements in connection with participant loans granted under the CARES Act such as the increased limits and the one-year deferral of payment for existing loans. The relief provides that DOL will not treat any fiduciary as violating ERISA, including the “adequate security” and “reasonably equivalent” basis requirements of ERISA section 408(b)(1) solely because –the fiduciary made a loan to a qualified individual during the loan relief period in compliance with the CARES Act and related guidance, or a qualified individual delayed making a loan repayment in compliance with the CARES Act and related guidance.