IRS, PBGC Grant Relief to Victims of California Disasters

By John Iekel • January 18, 2018 • 0 Comments
The IRS and Pension Benefit Guaranty Corporation (PBGC) are granting relief to those in the Golden State who have suffered due to the recent wildfires, floods, mudslides and debris flows that began on Dec. 4, 2017.

This is only the most recent action by the IRS and PBGC to give such Californians a break. They had granted relief to victims of the wildfires that raged in California during the fall. And as 2017 drew to a close, the U.S. House passed H.R. 4667, a bill that would extend to victims of the California wildfires access to their 401(k)s and similar plans without incurring IRS penalties or immediate tax liability; the measure is on the Senate calendar for a vote.

The IRS in CA-2018-01 provided an extension for filing the Form 5500 series returns as a result of these disasters. This relief is available for taxpayers who reside or have a business in the disaster area, which the IRS defines as Los Angeles, San Diego, Santa Barbara and Ventura Counties. The relief generally extends from Dec. 4, 2017 through April 30, 2018.

The relief regarding PBGC deadlines that the PBGC has announced in Disaster Relief Announcement 18-01 is available to “designated persons,” who in this case are any persons responsible for meeting those deadlines and are located in the disaster area the IRS defined.

The PBGC is granting filing extensions for Form 5500 series. It also is granting the relief to designated persons who cannot reasonably obtain information or other assistance needed to meet the deadline from a service provider, bank, or other person and whose operations are directly affected by wildfires, flooding, mudflows and debris flows that began on Dec. 4, 2017 in California.

A Caveat

The PBGC notes that Disaster Relief Announcement 18-01 does not cover every situation nor every person that might experience difficulty in meeting a PBGC deadline for reasons relating to the recent California natural disasters. In addition, the announcement does not grant specific disaster relief for all filings; for example, it does not provide relief for certain filings that involve particularly important or time-sensitive information where there may be a high risk of substantial harm to participants or the PBGC insurance program, such as:

  • notices of large missed contributions under ERISA Section 302(f) (Form 200);

  • advance notices of reportable events under ERISA Section 4043; and

  • annual financial and actuarial information from certain controlled groups under ERISA Section 4010.

Premiums. If the plan administrator of a plan is a Designated Person, the PBGC says it will treat as timely any premium filing required to be made for the plan beginning on or after Dec. 4, 2017, and on or before April 30, 2018, if the filing is made by April 30, 2018. For such filings the PBGC says it will waive the applicable penalty, but not the applicable interest charge.

Single-Employer Plan Terminations. If the plan administrator of a plan that is terminating in a standard termination is a Designated Person, any of the following plan termination deadlines for the plan that fall on or after Dec. 4, 2017, and on or before April 30, 2018, are extended to April 30, 2018. These include the deadlines for:

  • filing the standard termination notice (Form 500);

  • completing the distribution of plan assets; and

  • filing the post-distribution certification

Distress Terminations. If the plan administrator of a plan that is terminating in a distress termination is a Designated Person and the deadline for filing the distress termination notice (Form 601) falls on or after Dec. 4, 2017, and on or before April 30, 2018, that deadline is extended to April 30, 2018.

Reportable Event Notices. If a Designated Person is responsible for filing a reportable event post-event notice for which the deadline falls on or after Dec. 4, 2017, and on or before April 30, 2018, that person’s deadline for filing is extended to April 30, 2018.

Annual Employer Reporting. The PBGC will grant relief as appropriate on a case-by-case basis regarding annual financial and actuarial information reporting. Such filing may be done by an alternative due date15 days after a plan’s Form 5500 due date, if certain requirements are met; the PBGC says that if such an alternative due date is based on a Form 5500 for which there is a Form 5500 Disaster Extension, the 15-day period will automatically be measured from the Form 5500 Disaster Extension Date.

Requests for Reconsideration or Appeals. The deadline for requesting review of a PBGC determination is generally 45 days (for an appeal) or 30 days (for a request for reconsideration) after the date of the determination. But the PBGC says that a Designated Person who seeks to file an appeal or request reconsideration of a determination falls between Dec. 4, 2017, and on or before April 30, 2018, may have until April 30, 2018 to do so.