Congress has failed to pass the necessary appropriations legislation to keep the federal government open into the new fiscal year that began October 1, 2013. As a result, the federal government has “shut down,” and many agencies and offices that regulate your retirement plan are operating at significantly reduced capacities, or are not operating at all. Despite the shutdown, your obligations continue.
Employee Benefits Security Administration (EBSA)
- Less than five percent (46 out of 986) of employees are being retained in EBSA. According to their website, the staff that is working through the furlough are only working to “pursue criminal cases involving ERISA plans, pursue civil proceedings and remedies necessary to prevent an imminent threat to property, particularly including plan assets, and address situations posing an imminent threat to human life due to the denial of health or disability benefits by an ERISA-covered plan.”
- The agency halted retirement plan audit activity, advisory opinion processing, voluntary fiduciary correction programs, delinquent filer voluntary correction programs, and prohibited transaction exemption processing. In addition benefits advisor staff to answer questions about your rights under ERISA, are unavailable.
Pension Benefit Guaranty Corporation (PBGC)
- The PBGC does not rely on annual appropriations for its funding, as a result the shutdown does not affect it and it is open for business.
Internal Revenue Service (IRS)
- Less than 9.5 percent (8,824 out of 94,516) of employees are being retained by the IRS during the furlough, with the majority employed in the agency’s Criminal Investigations Unit and Information Technology Services.
- The agency has halted retirement plan audit activity, determination letter processing, private letter rulings, and voluntary correction program activities.
The most pressing deadline facing retirement plan sponsors involves the filing deadline for the Form 5500 Annual Report/Return. For calendar-year retirement plans, the deadline for filing the Form 5500 Annual Report/Return is October 15th for plans that previously obtained an extension of the normal July 31st filing date. The October 15th deadline still applies for these plans, despite the shutdown. If your retirement plan has submitted or is considering submission of a determination letter, private letter ruling, and voluntary correction programs with the IRS, these are halted pending the end of the shutdown.
Members of Congress and “essential” staff members are working through the shutdown, although members of Congress have wide discretion in determining who is deemed “essential.” As a practical matter, many hearings and committee sessions at which legislation is drafted and voted upon have been postponed indefinitely.
The duration of the government shutdown is uncertain, with negotiations very fluid. If you have questions about plan administration, or if you are having difficulty obtaining guidance from government sources, please contact your Lockton Retirement Services representative.
Fiduciary Risk Management: Compliance Services
Sam Henson, JD l Jessica Skinner, JD
Molly Callender, JD
via Lockton Retirement Services, The Beacon