Plus:
- Important news for Puerto Rico plans
- International Benefits
U.S. Territories are required to follow ERISA Mandates. The U.S. Territories included are:
- American Samoa
- Marianas
- Guam
- Puerto Rico
- The Virgin Islands
Special Extension for Puerto Rico
Puerto Rico faced severe storms back in February and as a result, has a special extension.
Are You Eligible?
Eligible businesses that have addresses located within the state of Puerto Rico as specified by the IRS are to receive the special extension. The areas affected are: Cataño, Dorado, Toa Baja, Vega Alta, and Vega Baja.
Which ERISA Plan Form 5500s Are Affected?
The extension applies to deadlines; either an original or extended due date that occurred on or after February 4, 2022 and before June 15, 2022. These are postponed through June 15, 2022.
How Will Wrangle Handle It?
Wrangle will check the “special extension” box in Part I, Line D of the main body of the Form 5500 and describe the relief on the associated explanation line stating with “Puerto Rico Severe Storm Relief.”
Additional Key Notes
The Tax Extension Relief extension applies to various tax filings and payment deadlines starting in February and applies automatically to any taxpayer (business or individual) whose address of record with the IRS is located within the state of Puerto Rico as specified by the IRS. Those located outside of Puerto Rico who have records within the affected area that are necessary to complete tax filings must contact the IRS to request the extension relief. The relief specifically applies to Form 5500 filings as described in Rev. Proc. 2007-56, which indicates that disaster extensions permitted by the IRS will also be permitted by the DOL.
If the plan administrator receives a late filing or late payment penalty notice from the IRS that has an original or extended filing payment or deposit due date that falls within the postponement period, the plan administrator should call the telephone number on the notice to have the IRS abate the penalty.
What About International Policies?
International policies can be tricky since ERISA mandates provide only a limited number of details on them.
- ERISA Title I 29 U.S.C. § 1003(b)(4) provision covers international grounds
- Plans that are established and maintained outside of the U.S. primarily for the benefit of individuals substantially all of whom are nonresident aliens are not subject to coverage under ERISA
Here are some basic details to consider. If there are still areas of uncertainty, we would encourage an ERISA attorney be asked to review and advise.
| Attributes | Is a 5500 needed? Is the employee to be counted as an enrolled participant on the 5500? |
| An expatriate working for a U.S. firm in a foreign country; the benefits are maintained in the U.S. | Yes |
| A foreign national working for a U.S. firm in the U.S. is enrolled in the firm’s benefits. The benefit policies are maintained in the U.S. 1 | Yes, unless the ERISA plan document states otherwise. |
| A non-U.S. company with a satellite office in the U.S. has a benefit contract maintained in the U.S. The enrolled participants are both U.S. citizens and foreign nationals. | Maybe. Wrangle surmises that the 5500 would be filed and the U.S. citizens would be counted. The best practice is to seek advice from an attorney. |
| Foreign nationals working in their country for a U.S. firm. The benefit contract is maintained in the U.S. | Unknown. The best practice is to seek advice from an attorney. |
| A foreign company maintains contracts outside of the U.S. and a very small portion of the total population are U.S. citizens working abroad. There are no U.S.-based offices. | No |
1 The DOL looks at the Form 5500 instruction’s definition of a participant. Status as a U.S. citizen or foreign national is not mentioned (description found on pages 16-17 of the 2020 Form 5500 instructions). A portion of the definition is listed below:
An individual becomes a participant covered under an employee welfare benefit plan on the earliest of these three occurrences:
- The date designated by the plan as the date on which the individual begins participation in the plan
- The date on which the individual becomes eligible under the plan for a benefit is subject only to the occurrence of the contingency for which the benefit is provided
- The date on which the individual contributes to the plan, whether it is voluntary or mandatory