Relief . . . Just a Little Bit – IRS Notice 2020-23: Limited Extensions of Form 5500

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By Kevin Selzer and Lyn Domenick

In the midst of everything going on, we wanted to point out a few “under the radar” implications of IRS Notice 2020-23.  The Notice, issued on April 9th, provides that tax-related deadlines that fall between April 1, 2020 and July 14, 2020 (the “delay period”) are automatically extended to July 15, 2020. 

Delayed 5500s.  Most plan sponsors hoping for Form 5500 relief will have to wait for additional guidance since only a small group of plans have Form 5500 deadlines fall during the delay period.  For example, the regular Form 5500 due date for calendar year plans (July 31st) falls just outside of the delay period.  We note that the DOL has authority under the CARES Act to provide additional Form 5500 relief.

Participant Loans in Retirement Plans.  The relief also permits plan sponsors of retirement plans to delay participant loan repayments due during the delay period.  This suspension is different from the CARES Act loan suspension – which allows suspension of loan repayments due between March 27, 2020 and December 31, 2020.  Although the Notice 2020-23 suspension is arguably broader in that the participant need not be affected by COVID-19, we anticipate that plan sponsors interested in this relief will prefer the CARES Act suspension since (1) its relief is greater (longer delay), and (2) the standard of being affected by COVID-19 is a low hurdle for participants to clear.

Other Impacts.  Other benefit-related changes made by the Notice include –

  • 83(b) elections required to be filed during the delay period now can be filed as late as July 15, 2020.
  • 2019 Excess deferrals in retirement plans (that were required to be distributed on April 15, 2020) can now be distributed as late as July 15, 2020.
  • Indirect rollovers (eligible rollover distributions from qualified plans/IRSs) required to be completed during the delay period can now be completed by July 15, 2020.

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