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IRS’s Latest COVID-19-Related Deadline Relief Affects HSAs and Retirement Plans



IRS Notice 2020-35 (May 28, 2020)

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The IRS has issued another notice extending tax deadlines on account of the COVID-19 emergency. The new notice supplements IRS Notice 2020-23 and earlier guidance (see our Checkpoint article) by extending the deadlines for certain additional time-sensitive actions relating to employment taxes, exempt organizations, employee benefit plans (including 401(k) plans), HSAs, IRAs, and other specified accounts. With some exceptions, the extensions apply only to actions due to be performed on or after March 30, 2020, and before July 15, 2020 (the relief period). If a time-sensitive action required by the Code has an ERISA parallel, both deadlines are extended by this relief. Here are highlights of the extensions affecting 401(k) plans and HSAs:

  • Excise Tax Returns. The relief period is disregarded when determining any interest or penalty resulting from the failure to file a return of excise taxes on Form 5330 or to pay any “associated” excise taxes. Interest and penalties for failures relating to postponed filings and payments will begin to accrue on July 16, 2020.
  • EPCRS. Plan sponsors who received a compliance statement under the IRS’s Voluntary Compliance Program (VCP) requiring corrective action during the relief period have until July 15, 2020, to complete that action. The extension applies to all corrective actions required by a compliance statement, including the adoption of corrective amendments.
  • Form 5498. The usual June 1, 2020 deadline for trustees and custodians to file and furnish account holders with Form 5498-SA for HSAs, Archer MSAs, or Medicare Advantage MSAs, is postponed to August 31, 2020. [EBIA Comment: As explained in the form’s instructions, some individuals who received a statement of their account’s fair market value by February 1, 2020, would not have to receive another statement or a copy of Form 5498-SA.] The deadline for filing Form 5498 for IRA contributions—including contributions to a deemed IRA in a 401(k) plan—is also postponed from June 1, 2020, to August 31, 2020. Penalties for postponed filings that are not filed by the extended deadline will begin to accrue on September 1.

EBIA Comment: Careful readers may have noticed that the starting date of the relief period under this guidance, March 30, 2020, is two days earlier than in the IRS’s previous guidance, which generally applied only to actions due on or after April 1, 2020. That change has not been extended to the earlier guidance. For more information, see EBIA’s 401(k) Plans manual at Sections XXIV.L.4 (“Excise Taxes on Prohibited Transactions”); XXXI.M.3 (“Form 5558 (Application for Extension of Time to File Certain Employee Plan Returns)”); and XXXV.E.3 (“VCP Compliance Statement”). See also EBIA’s Consumer-Drive Health Care manual at Section XVII.A (“HSA Trustee/Custodian Reporting Obligations”).

Contributing Editors: EBIA Staff.

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