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ESOP Companies Should Address Cash Flow Due to Layoffs Before It's Too Late
Fox Rothschild LLP Link to more items from this source
Apr. 2, 2020

"ESOP sponsors need to appreciate the extent of the financial strain imposed on their company by a simultaneous layoff of a sizeable portion of their workforce. Each one of these terminated employees will receive a distribution of shares from the Plan at the same time and therefore will become eligible to 'cash-out' all or part of those shares concurrently. It is this spike of simultaneous cash out requests by a significant number of employees -- at a time when the company is least able to afford to make these payments -- that may put a catastrophic financial strain upon an ESOP sponsor."

Tags: Coronavirus (COVID-19)  •  Employee Stock Ownership Plans (ESOPs)

COVID-19 Impact on Multiemployer Pension Plans
Bolton Link to more items from this source
Apr. 2, 2020

"Multiemployer pension plans will have to manage work force availability, business interruption, and investment uncertainty after significant market value decreases. The impact on individual plans will depend on plan funded status, maturity of the plan, whether the industry is deemed essential in areas with 'stay at home' restrictions, and actuarial valuation date."

Tags: Coronavirus (COVID-19)  •  Multiemployer Plans

FAS87 ASC715 Discount Rates and Moody's Rates, March 31, 2020
David Rigby, via BenefitsLink Message Boards Link to more items from this source
Apr. 2, 2020

An unofficial monthly report of the Moody's Daily Long-term Corporate Bond Yield Averages and Moody's Daily Treasury Yield Averages (used as benchmarks by some corporate pension plans).

Tags: Funding of Defined Benefit Pension Plans

Employee Benefit and Executive Compensation Changes Made by the CARES Act
Haynes and Boone, LLP Link to more items from this source
[Guidance Overview]
Apr. 2, 2020

"What COVID-19 testing and treatment is our company's employer-sponsored group health plan required to cover? ... Can [HDHP] cover costs associated with telehealth without requiring the participant to pay a deductible? ... Does the CARES Act contain any provisions which may be applicable to employer-sponsored group health plans, but are not related to COVID-19? ... My employees are no longer able to make loan repayments on their student loans -- is there anything I can do as an employer to help them? ... Is my [retirement] plan obligated to make required minimum distributions in 2020? ... Does the CARES Act provide any relief for sponsors of defined benefit plans?"

Tags: CARES Act  •  Coronavirus (COVID-19)  •  Health Plan Design  •  Retirement Plan Admininstration  •  Retirement Plan Design

Significant Retirement Plan Distribution and Loan Provisions of the CARES Act
PASI Link to more items from this source
[Guidance Overview]
Apr. 1, 2020

"Plan Administrators can rely on a Participant's written certification that he or she is eligible for the distribution. The statute does not include a qualification regarding the Plan Administrator's knowledge to the contrary; however, if a Plan Administrator does possess such contrary knowledge, you may be under an implied obligation to take action.... Who will be responsible for ensuring loan repayments resumed on January 1, 2021, and then are increased following the 1-year suspension? The Plan Administrator. Certain recordkeepers might be able to assist with this, although there is very little incentive for them to invest heavily in this feature because it will be moot by the end of 2021."

Tags: CARES Act  •  Coronavirus (COVID-19)  •  Retirement Plan Admininstration

Special Distributions from Puerto Rico Retirement Plans and IRAs Are Extended to COVID-19 Victims
McConnell Valdes Link to more items from this source
[Guidance Overview]
Apr. 1, 2020

"CL 20-09 will continue in full force and effect, except that it will also apply to Eligible Distributions made from Puerto Rico qualified retirement plans and individual retirement accounts during the Relief Period (February 20, 2020 through June 30, 2020) to cover Eligible Expenses incurred as a consequence of the public health emergency created by the COVID-19. These distributions will be subject to the same requirements imposed to Eligible Distributions resulting from the earthquakes."

Tags: Coronavirus (COVID-19)  •  Retirement Plan Admininstration

Extension of Restatement Deadlines for 403(b) and Defined Benefit Plans; Plan Loan Extensions Under CARES Act
Ferenczy Benefits Law Center Link to more items from this source
[Guidance Overview]
Apr. 1, 2020

"The remedial amendment period for 403(b) plans was set to expire on March 31, 2020. The IRS announced that it is extended to June 30, 2020.... The remedial amendment period for the second six-year cycle for defined benefit plans, which was due to end on April 30, 2020, is extended to July 31, 2020.... The actual language of CARES provides that the deadlines of Code section 72(p) are automatically delayed statutorily for a one-year period for eligible loans.... If an employer has taken action which, by definition, causes the employee to be eligible for the loan delay, it should modify the loan procedure to permit it to suspend loan payments automatically while the crisis is at hand."

Tags: CARES Act  •  Coronavirus (COVID-19)  •  Retirement Plan Amendments  •  Retirement Plan Design

Retirement Plan Provisions in the CARES Act: Action Items for Plan Sponsors
Kushner & Company Link to more items from this source
[Guidance Overview]
Apr. 1, 2020

"If you intend to allow for COVID-19 related distributions in 2020, a new distributive event would have to be created that is not subject to the 10% early distribution penalty tax or mandatory 20% withholding.... If COVID-19 distributions are being repaid to your retirement plans, procedures must be in place to treat any such payments as rollover contributions and limit such repayments to the aggregate amount of distributions that the individual received from all retirement plans in your controlled group."

Tags: CARES Act  •  Coronavirus (COVID-19)  •  Misc. Distribution Issues  •  Retirement Plan Admininstration

Editor's Pick COVID-19 Plan Document and Administration FAQs
ASC Link to more items from this source
[Guidance Overview]
Apr. 1, 2020

"These FAQs are in response to the numerous plan document and plan administration questions ASC has received from clients relating to issues associated with the COVID-19 outbreak. We will continuously update these FAQs as we address new issues or receive updated information from the [IRS] and the [DOL]."

Tags: Coronavirus (COVID-19)  •  Retirement Plan Admininstration

CARES Act Brings Much-Needed Relief (and New Obligations) for Benefit Plans
Faegre Drinker Link to more items from this source
[Guidance Overview]
Apr. 1, 2020

"[T]he delayed repayment rule may create recordkeeping and participant communication challenges and should be coordinated with any rules a plan has regarding when a loan is considered in default ... Guidance from the IRS would be helpful as to: [1] whether employees can self-certify that they meet the conditions to be a qualified individual; [2] whether a plan is required to provide the one-year delay for loan repayments; and [3] whether the relief applies to loans which would otherwise be defaulted."

Tags: 401(k) Plans  •  CARES Act  •  Coronavirus (COVID-19)  •  Retirement Plan Admininstration  •  Retirement Plan Design

The CARES Act Participant Loan Payment Suspension Rules
Business of Benefits Link to more items from this source
[Guidance Overview]
Apr. 1, 2020

"The structure and the language used by the drafters of the CARES Act ... actually appears to legally modify the loan agreement between COVID participants and the plan.... [N]ote that the amortization schedules in the Code did not actually change ... You will also need to discover a way to handle volitional payments... But this analysis does leave open the question on how a non-ERISA loan can be modified by federal law."

Tags: 401(k) Plans  •  403(b) Plans and Annuities  •  CARES Act  •  Coronavirus (COVID-19)  •  Retirement Plan Admininstration

CARES Act and Defined Benefit Plans
Spencer Fane Link to more items from this source
[Guidance Overview]
Apr. 1, 2020

"[1] Minimum required contributions delayed ... [2] Benefit restrictions relief ... [3] The deadline for employers to adopt a pre-approved defined benefit plan is extended to July 31, 2020 ... [4] Required minimum distributions ... waiver does not apply to defined benefit plans."

Tags: CARES Act  •  Coronavirus (COVID-19)  •  Retirement Plan Admininstration

The Coronavirus Crisis: What Plan Fiduciaries Should Do
FredReish.com Link to more items from this source
Apr. 1, 2020

"[T]he sudden and large investment losses in the 401(k) plans that you sponsor -- and act as fiduciaries for -- present issues more challenging than those typically encountered by employers and plan committees.... Here are several suggestions for fulfilling your legal responsibilities, as well as best practices for managing your 401(k) plan."

Tags: Coronavirus (COVID-19)  •  Fiduciary Duties

Important Facts About 401(k) Plans (PDF)
Investment Company Institute [ICI] Link to more items from this source
Apr. 1, 2020

24 pages. "In the first years of these rules, employers typically offered 401(k) plans as supplements to their defined benefit (DB) plans. Almost four decades later, 401(k) plans have grown to become the most common employer-sponsored defined contribution (DC) retirement plan in the United States"

Tags: 401(k) Plans  •  Retirement Plan Design

Pandemic and Plan Service Providers: Chances Are, Your Business Continuity Plan Did Not Fully Address This
The Wagner Law Group Link to more items from this source
Apr. 1, 2020

"[B]roker-dealers, investment advisory firms, and the recordkeepers that deal with retirement plan assets are well advised to review their business continuity planning.... Although specific guidance may not apply directly to a specific line of business, taking a holistic approach can provide firms with an overall view of how the regulators want the entire industry to approach this pandemic..... [1] Current action items for service providers ... [2] Business continuity plans ... [3] Specific pointers ... [4] Responses from regulators."

Tags: Coronavirus (COVID-19)  •  Retirement Plan Admininstration

Trying to Solve the COVID-19 Crisis May Exacerbate the Future Retirement Crisis
Miller Johnson Link to more items from this source
Apr. 1, 2020

"In addition to there being many unanswered questions regarding these new provisions, the last thing most employers should want is for their employees to tap their retirement plan accounts to satisfy a short term cash flow problem.... [T]he participant will be selling assets at the worst possible time, whether the participant takes a distribution or a loan.... [P]articipants should be encouraged to continue to contribute to the Plan (even if the employer must suspend its contributions), since the best time to invest in assets like stocks is generally after a significant drop in the market.... This is also a good time for participants who can afford to do so to consider a Roth conversion."

Tags: 401(k) Plans  •  Coronavirus (COVID-19)  •  Retirement Plan Admininstration

Unraveling U.S. Retirement Savings: How a Global Pandemic Threatens to Undo Decades of Planning
Bryan Cave Leighton Paisner LLP Link to more items from this source
Apr. 1, 2020

"[P]lan sponsors should pause before adopting the new in-service withdrawal and loan options wholesale. The options made available under the CARES Act are permissive, not required. Implementing a thoughtful, needs-based, COVID-19 withdrawal/loan policy could protect employees' financial security for decades to come. Plan sponsors can adopt an incremental approach to COVID-19 in-service withdrawals or loans, and should consider doing so in the interest of helping participants not decimate hard-won savings[.]"

Tags: 401(k) Plans  •  CARES Act  •  Coronavirus (COVID-19)  •  Retirement Plan Design

CARES Act for Retirement and Health Plan Sponsors
Maynard Cooper & Gale Link to more items from this source
[Guidance Overview]
Apr. 1, 2020

"Due to the urgency of the current situation, your retirement plan service provider may accelerate the decision-making process by treating these distributions as an automatic plan feature ... [It] is paramount that plan sponsors connect with their service providers as soon as possible to determine how their plans will address these distributions.... Effective March 27, 2020, employers with a high-deductible health plan (HDHP) and accompanying [HSA] can provide coverage for telehealth services before a participant reaches his or her deductible without disqualifying them from being eligible to contribute to their HSA."

Tags: 401(k) Plans  •  CARES Act  •  Coronavirus (COVID-19)  •  Health Plan Design  •  Misc. Distribution Issues  •  Misc. Health Plan Administration Issues  •  Retirement Plan Admininstration

Minimizing the Risk of ERISA Litigation in a Turbulent Economic Climate
Proskauer Link to more items from this source
Mar. 31, 2020

"Recent swings have seen historic losses in market prices, and although all investments are feeling the hit and some slightly rebounded after Congress passed the $2.2 trillion CARES Act, some will be more adversely affected than others. This is precisely the environment in which plaintiffs can make hindsight accusations against ERISA plan fiduciaries for offering allegedly imprudent investment options.... [T]here are some types of investments that are considerably more likely to be the target of claims under ERISA."

Tags: CARES Act  •  Coronavirus (COVID-19)  •  Fiduciary Duties  •  Retirement Plan Investments: Misc. Issues

ARA Letter to EBSA Requesting Deadline Relief Due to Impact of COVID-19 Pandemic (PDF)
American Retirement Association [ARA] Link to more items from this source
[Opinion]
Mar. 31, 2020

"[ARA believes] that the ongoing and likely future impacts of the current COVID-19 (Coronavirus) pandemic will impede efforts by plan sponsors and service providers to comply with [ERISA] ... [and that] reasonable relief relating to certain ERISA notice and disclosure requirements is appropriate. The enclosed table summarizes the requirements for which we believe extensions of 90-120 days are warranted."

Tags: Coronavirus (COVID-19)  •  Retirement Plan Admininstration

Act Now to Determine Treatment of COVID-19 Sick and Leave Pay Under Your Retirement Plan
Warner Norcross & Judd LLP Link to more items from this source
Mar. 31, 2020

"Starting April 1, 2020, certain employees are entitled to receive sick pay and leave pay related to COVID-19 ... Whether these new sick and leave payments are compensation for contribution and accrual purposes depends on the plan's definition of creditable or plan compensation.... The answer may be different for every plan." [Editor's note: this issue is currently being discussed in a thread on our message boards.]

Tags: Coronavirus (COVID-19)  •  Retirement Plan Admininstration  •  Retirement Plan Design

Editor's Pick COVID-19 Employee Benefit and Executive Compensation Questions and Answers
Haynes and Boone, LLP Link to more items from this source
[Guidance Overview]
Mar. 31, 2020

"[1] Should benefits coverage continue while an employee is on an unpaid furlough? ... [2] If an employee is off work because he or she has been quarantined due to potential exposure to COVID-19, does this qualify as a disability for purposes of an employer's short-term disability (STD) and long-term disability (LTD) plans? ... [3] What tax-free payments can an employer make to its employees as 'qualified disaster relief'? ... [4] If an employer sponsors a nonqualified deferred compensation plan, could the employer suspend, reduce, or eliminate the employer's contribution to, or terminate, the plan during the year? ... [5] Can employees' contributions to a nonqualified deferred compensation plan be suspended during the year, or can they take hardship withdrawals from the plan? ... [6] Would expenses incurred by employees qualify as 'financial hardships' eligible for hardship withdrawals under a qualified retirement plan? ... [7] Can a plan sponsor suspend, reduce, or eliminate matching and other contributions under qualified retirement plans (including safe harbor plans) mid-year? ... [8] Can a plan sponsor freeze or terminate its defined benefit or cash balance plan? ... [9] What is the effect of the current market and interest rate down turn on the funded status of defined benefit pension plans?"

Tags: 401(k) Plans  •  Coronavirus (COVID-19)  •  Family and Medical Leave Benefits, Incl. FMLA  •  Health Plan Design  •  Misc. Health Plan Administration Issues

Eighth Circuit Rules on ERISA's Church Plan Exemption
Jackson Lewis P.C. Link to more items from this source
Mar. 31, 2020

"The focus in Sanzone (as in other post-Advocate 'church plan' cases) is on whether a hospital's internal benefits committee constitutes a principal purpose organization. Consistent with rulings by other courts, the Eighth Circuit said yes, applying ordinary meanings to the statutory terms 'maintain' and 'organization.' " [Sanzone v. Mercy Health, No. 18-3574 (8th Cir. March 27, 2020)]

Tags: Church-Sponsored Plans

COVID-19 Impact on U.S. Retirement Plans (PDF)
Buck Link to more items from this source
Mar. 31, 2020

10 pages. "At this time it is critical that [retirement] programs continue to function and fulfill their important role in society as many will depend on them to provide much needed financial security. This reference document addresses the potential disruptions to employer sponsored retirement programs.... [1] Plan sponsor processes ... [2] Pension plan administration ... [3] Governance ... [4] Investment ... [5] Defined contribution plans ... [6] Funding."

Tags: 401(k) Plans  •  Coronavirus (COVID-19)  •  Retirement Plan Admininstration

Puerto Rico Treasury Department Extends Tax Exemptions for COVID-19 Employer-Provided Payments and Amends Rules for Qualified Retirement Plan and IRA Distributions
Littler Link to more items from this source
[Guidance Overview]
Mar. 31, 2020

"CC RI 20-23 amends Internal Revenue Circular Letter 20-09 (CC RI 20-09), which provided special rules and procedures applicable to distributions from qualified retirement plans and individual retirement accounts (IRAs) following the recent earthquakes in Puerto Rico, to incorporate, as part of the definition of 'Eligible Expenses,' those related to the COVID-19 emergency."

Tags: Coronavirus (COVID-19)  •  Retirement Plan Admininstration


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