A recent rule change issued by the United States Postal Service (USPS) may have significant implications for plan administrators. The rule alters how the USPS determines the official postmark date, introducing uncertainty for documents and payments that must meet strict statutory or regulatory mailing deadlines.

What Changed?

Late last year, the USPS revised its definition of a postmark date. Under the new rule, the postmark date is defined as the date on which a mail piece is first processed by the applicable automated sorting facility. Importantly, this is not the date the mail piece is received by the USPS and not the date it is dropped off at a post office or collection box. USPS states that this is not a change in practice, but instead, the adjustments to the USPS transportation operations will result in some mail pieces not arriving to the processing facilities on the same day that they are mailed.

As a result, the date an item is delivered to the USPS is no longer relevant for determining whether a filing or notice is timely mailed. This creates uncertainty as to when a postmark will actually be applied, particularly for time-sensitive benefit plan documents.

Benefit Plan Documents Affected

This USPS rule change affects a wide range of employee benefit plan documents that are subject to strict mailing deadlines, including:

• Tax returns and tax-related payments, e.g. Forms 1099-R, 945, 941, 1042-S, 1042;
• Code Section 402(f) rollover notices; and
• Automatic enrollment notices.

Failure to meet an applicable deadline can result in penalties and other adverse consequences.

Departure from Historical Practice

Historically, Internal Revenue Code Section 7502 and relevant case law treated the date an item was delivered to the USPS as the postmark date. Under that framework, many plan administrators and individuals reasonably assumed that mailing a document on or near its due date would satisfy applicable deadlines.

That assumption is no longer reliable. Because processing delays may occur before an automated sorting facility applies a postmark, an item dropped off on the deadline could receive a postmark dated after the due date.

Recommended Risk Mitigation Strategies

USPS notes that the postmark was never intended to be a service offered to the public for providing proof of mail, rather as an internal control for postal operations. However, given this change, plan administrators should take additional precautions when mailing benefit plan-related documents with fixed deadlines. Recommended approaches include:

• Using certified or registered mail to obtain verifiable proof of mailing;
• Obtaining a certificate of mailing from the USPS;
• Requesting a manual postmark by presenting the item at a USPS retail counter;
• Utilizing electronic delivery or filing, when permitted under applicable rules; and
  • Note: Electronic delivery is not always available and may not satisfy requirements for certain notices.
• Using approved private delivery services (such as DHL, FedEx, or UPS) at recognized service levels, with written proof of mailing.

For large-scale or mass mailings, these options may be impractical or cost-prohibitive. In such cases, plan administrators should strongly consider mailing well in advance of the deadline to account for potential delays before a postmark is applied.

Coordination with Vendors and Service Providers

It is also critical for plan administrators to coordinate with vendors and third-party service providers responsible for mailing plan documents. Plan administrators should confirm that these providers are aware of the USPS rule change and have updated their procedures accordingly.

Plan administrators also should note that stamps from postage meter machines will no longer be considered a postmark or cancelled postage.

In most cases, the plan administrators remain legally responsible for timely compliance—even when mailing responsibilities are delegated to a third party.

Additional Assistance

For further questions or assistance, please contact Audra J. Ferguson, Robert L. Gauss, Nicole Giambarrese, Lisa Erb Harrison, Lindsay Knowles, Rachel Mattingly Phillips, Stanley D. Prybe, Shalina Ann Schaefer, Chris Sears, or the Ice Miller Employee Benefits attorney with whom you regularly work.

This publication is intended for general information purposes only and does not and is not intended to constitute legal advice. The reader should consult with legal counsel to determine how laws or decisions discussed herein apply to the reader's specific circumstances.