The IRS recently issued another notice extending tax deadlines because of the COVID-19 pandemic. Notice 2020-35 supplements IRS Notice 2020-23 and earlier guidance by extending the deadlines for certain additional time-sensitive actions relating to employment taxes; exempt organizations; employee benefit plans, including 401(k)s; Health Savings Accounts (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 Internal Revenue Code has a parallel with the Employee Retirement Income Security Act, 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 (“Return of Excise Taxes Related to Employee Benefit Plans”), 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.
Employee Plans Compliance Resolution System. Plan sponsors who received a compliance statement under the IRS’s Voluntary Compliance Program 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 (“IRA Contribution Information”). The usual June 1, 2020 deadline for trustees and custodians to file and furnish account holders with Form 5498-SA for HSAs, Archer Medical Savings Accounts (MSAs) or Medicare Advantage MSAs, has been postponed to August 31, 2020.
As explained in the form’s instructions, some individuals who received a statement of their account’s fair market value by February 1, 2020, wouldn’t 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 — has also been postponed from June 1, 2020, to August 31, 2020. Penalties for postponed filings that aren’t filed by the extended deadline will begin to accrue on September 1, 2020.
Careful readers may notice that the starting date of the relief period under this guidance — March 30, 2020 — is two days earlier than the date provided in previous IRS guidance, which generally applied only to actions due on or after April 1, 2020. This change hasn’t been extended to the earlier guidance.
We highly recommend you confer with your Miller Kaplan advisor to understand your specific situation and how this may impact you.