Retirement Plans Newsletter

March 20, 2020

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View More COVID-19 (Coronavirus) News and Resources

[Official Guidance]

Text of CalPERS Circular Letter 200-016-20: COVID-19 Impacts to CalPERS Reporting (PDF)

"Will CalPERS grant extensions for submitting and posting regular earned period payroll reports due to potential closures caused by COVID-19? ... If contributions, payroll, or retired annuitant data is reported late during the COVID-19 pandemic, will CalPERS consider waiving fees and/or interest? ... If a membership enrollment is reported late during the COVID-19 pandemic, will CalPERS consider waiving administrative fees and penalties? ... If we put a full-time, eligible member on Paid Administrative Leave because their work-site is shut down due to COVID-19, is their pay still considered reportable compensation? ... Can an employer make an advance estimated payment on contributions?"

California Public Employees' Retirement System [CalPERS]

[Guidance Overview]

Can We Suspend Our Safe Harbor Nonelective or Matching Contribution?

"The plan must be amended to reflect the suspension of the safe harbor contribution.... [A] notice must be given to plan participants explaining that the contribution has been suspended. This notice must be provided at least 30 days prior to the effective date of the suspension.... If the plan is terminated due to circumstances related to business hardship the safe harbor status is preserved.... Even if the reduced safe harbor contribution still meets the safe harbor contribution formula, ADP/ACP testing will apply[.]"

Retirement Management Services, LLC

Employer Actions for 401(k) Plans Sickened by Coronavirus

"[1] Confirm continued availability of service providers ... [2] Educate and communicate  ... [3] Advise participants to seek professional guidance  ... [4] Monitor plan investment alternatives  ... [5] Deep dive on stable value funds."

Dickinson Wright

Coronavirus Check-Up for Retirement Plans

"Plan sponsors should review their plans to understand the available in-service withdrawals.... Plans will want to review their plan loan policies on addressing loan payments during leaves, including leaves without pay.... For plans that do not have a ... safe harbor formula, there may be significant flexibility to reduce or eliminate the employer contributions ... Plan sponsors will want to ... determine how leave related to the virus will be considered for vesting purposes."

Groom Law Group

Benefits Guidance in the Time of COVID-19: Monitoring Retirement Plan Investments and Participant Communications

"[1] [P]lan fiduciaries should call a meeting with the plan's investment advisors and service providers to discuss status of the retirement plan.... [2] Consider creating a communications plan to enhance participants' understanding of the plan and investments, as well as allay fears.... [3] Ensure plan documents (including summary plan descriptions) are organized in a fashion that they can be easily provided to meet any participant document requests. [4] Maintain regular contact with each other and determine ways to reach each other, as well as investment advisors and service providers, from remote locations."

Epstein Becker Green

Employer Responses to COVID-19: Suspending Employer 401(k) Contributions

"Businesses adversely affected by COVID-19 may be considering terminating their 401(k) plans to end their contribution obligations.... [T]he 'successor plan' rule in IRS regulations currently prohibits covering the same employees in a new plan for 12 months following the termination. A plan termination also requires full vesting of all participants and distribution of account balances to the participants, usually within 12 months. A more measured response would be to temporarily suspend or reduce employer contributions."

Cohen & Buckmann, P.C.

Legislation to Be Introduced to Suspend RMDs for 2020, Exempt Social Security Income from Taxation

"Sen. Ed Markey (D-MA) has proposed legislation (S 3527) to suspend for 2020 the obligation to withdraw required minimum distributions (RMDs) from employer-sponsored retirement plans and IRAs in response to investment market volatility accompanying the coronavirus (COVID-19) pandemic. Sen. Markey has also announced plans to introduce another bill to exempt Social Security benefits received in 2020 from taxation."

Ascensus

Senate Bill Would Expand Retirement Plan Access for Coronavirus Impact(s)

"The CARES Act [S 3548] includes provisions advocated by the American Retirement Association that loosen retirement plan hardship and loan rules to free up funds for individuals impacted by the Coronavirus pandemic."

American Retirement Association [ARA]

ERISA Considerations for Investment Managers: COVID-19 and Volatile Markets

"[E]ach time there is a subscription or redemption from a fund, the investment manager is required to recalculate the benefit plan investor percentage of the NAV for each class of equity in the fund.... [In] the context of the rapid actions that might be made during the quickly evolving financial market, managers of plan asset funds must continue to ensure their compliance with ERISA."

Schulte Roth & Zabel LLP

[Sponsored]

Free Comprehensive Directory of Coronavirus (COVID-19) News for Employee Benefit Plans

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BenefitsLink now publishes a free directory of: [1] Official guidance issued by IRS, DOL, HHS and other agencies; [2] Federal, state and local laws; [3] Analysis and explanations by law firms, consulting firms and others; and [4] Benefits-related items from popular news media and trade publications. Updated daily! Learn more


Annuity Purchase Update: March 2020 Interest Rates

"The strong equity market returns of 2019 were set back by poor performance in both January and February. The average duration 7 annuity purchase interest rates and average duration 15 rates have both decreased by roughly 27 basis points since last month. This decrease in rates led to a corresponding increase in annuity purchase prices of approximately 2% for Annuity Plan 1 and 4.25% for Annuity Plan 2."

October Three Consulting

Annuities, Hard Hit by COVID-19, Give Retirees One Less Option

"The falling stock market would have been a great selling point for annuities. But, much like dry goods and toilet paper, the products are vanishing from shelves.... [I]nsurance companies -- that have to contend with unprecedented volatility and extremely low interest rates -- can't adjust their annuities fast enough to keep them on the market."

InvestmentNews; subscription may be required

SECURE Act Part-Time Employee Provision: Don't Count Hours Unless Absolutely Necessary!

"Beginning in 2024, plans will be required to permit part-time employees who work at least 500 hours in three consecutive years to make elective deferrals to the plan. This means that hours will essentially need to be counted beginning in 2021. The complex tracking of part-time employee hours will likely result in many operational errors. [But] why count hours at all, if plan sponsors don't have to?"

Cammack Retirement Group

Retirement Assets Total $32.3 Trillion in Fourth Quarter 2019

"Total US retirement assets were $32.3 trillion as of December 31, 2019, up 5.0 percent from the end of September and up 16.4 percent for the year. Retirement assets accounted for 34 percent of all household financial assets in United States at the end of December 2019."

Investment Company Institute [ICI]

Benefits in General

[Guidance Overview]

Employee Benefits Questions and Answers Related to COVID-19

"[1] Is an employer health plan required to provide testing for and treatment of COVID-19 without a deductible or at a reduced cost? ... [2] Must employers provide paid leave to employees who are absent from work due to the COVID-19 emergency? ... [3] Can employers allow changes to employee elections under their Internal Revenue Code section 125 cafeteria plans to reflect changes in circumstances due to COVID-19?  ... [4] Can employees receive a loan or hardship distribution from their 401(k) or other defined contribution retirement plans on account of expenses related to COVID-19?  ... [5] Can an employer establish catastrophic leave-sharing or disaster leave-sharing programs to allow employees to assist one another with COVID-19 situations?"

Hanson Bridgett LLP

U.S. Tax Filing Deadline Moved to July 15

"The U.S. is extending the deadline for filing taxes from April 15 to July 15, Treasury Secretary Steven Mnuchin said in a tweet on Friday. The decision gives Americans three months longer than they typically would to file their taxes."

FOX Business

Majority of North American Companies Will Pay Hourly Workers Who Test Positive for COVID-19

"A new survey ... finds a majority of employers will continue to pay hourly workers who test positive for the virus (72%), whose workplace experiences a mandated closure (54%), or who have a cold or flu-like symptoms and voluntarily stay home (51%). However, only about one-third of companies (36%) will continue paying hourly workers when they stay home because they don't have childcare."

Willis Towers Watson

Communicating Through the Chaos of Coronavirus

"Use company-wide email communications, frequently and confidently.... Leverage chat software like Slack and Microsoft Teams ... Schedule video meetings where the attendees can see each other's expressions and react to one another in real time.... If your entire team is working remotely, find fun ways to connect."

Grooms Benefit Solutions

Employee Benefits Issues to Consider Before Deciding to Furlough or Terminate Employees During the COVID-19 Pandemic

"[1] Don't assume coverage continues during leaves or furloughs or automatically ends immediately upon termination of employment.... [2] COBRA continuation coverage (or state continuation coverage, if applicable) generally must be offered for all group health plans  ... [3] The [ACA] employer penalty should be considered.... [4] Plan for how employees will keep paying monthly premiums/contributions to maintain coverage during any leave period.... [5] Before taking any employment actions, the employer should first determine whether it maintains or maintained any formal or informal severance plan or policy ... [6] 401(k) and other retirement plan implications must be considered.... [7] [R]eview all deferred compensation agreements and other employment agreements for any leave or termination impact."

Jackson Lewis P.C.

Executive Compensation
and Nonqualified Plans

Section 409A Deadlines: Considerations for Employers Impacted by COVID-19

"[B]onus arrangements ... that are designed to be exempt from the requirements of Section 409A might specifically require payment by March 15, 2020 to avoid the more onerous requirements of Section 409A.... Employers ... [with] deferred compensation arrangements that permit employees to defer 'performance-based compensation' ... must ensure that the performance criteria be established by March 30."

Schulte Roth & Zabel LLP

COVID-19 and Public Company Executive Compensation Programs

"[1] Adjustment of 2020 performance goals.... [2] Delay of compensation decisions.... [3] Sufficient share pools.... [4] Reconsider the award mix.... [5] Consider the use of trailing averages.... [6] Repricing of stock options."

Snell & Wilmer

Selected Discussions
on the BenefitsLink Message Boards

Consequences of Missed 403(b) Restatement Deadline

"What are the consequences of a plan sponsor failing to get the 403(b) plan restated by March 31?"

BenefitsLink Message Boards

One Sponsor Acquires All of Another Sponsor's Stock -- Aligning HCE Definition Between Two Retirement Plans

"Straightforward stock acquisition -- Company A acquired Company B on 2/1/2020 and they each maintain their own 401(k) plans. Company A 401(k) uses the top-paid group election for the HCE definition while the Company B 401(k) does not. I know plans within a control group must have the same HCE definition, but does the 410(b)(6)(c) transition period apply to making the HCE definitions identical?"

BenefitsLink Message Boards

Eligible for Distribution if Put on a 30-Day Furlough?

"So an employer furloughs half its work force for 30 days. They are scheduled to come back in 30 days. They are still active, correct? And cannot take a distribution? Similarly, they would be considered to be on a leave with respect to their loans, yes?"

BenefitsLink Message Boards

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Press Releases

DOL Obtains Default Judgment to Restore $103,098 To Virginia Engineering Company Employees’ Retirement Plan
Employee Benefits Security Administration [EBSA], U.S. Department of Labor

Upcoming Events About Retirement Plans or Executive Compensation

Mar. 23
Webcast
Free
Paid Sick Leave, Paid Family Leave, Reductions in Force and other Symptoms of COVID-19
Jackson Lewis LLP
Mar. 23
Webcast
Free
COVID-19 Updates for Employers: Employee Benefits and Compensation Issues
Ogletree Deakins
Mar. 24
Webcast
Free
Voluntary Fiduciary Correction Program
Employee Benefits Security Administration [EBSA], U.S. Department of Labor
Mar. 24
Webcast
Form 5500 Series Update
NIPA [National Institute of Pension Administrators]
Mar. 24
Webcast
Free
Merger, Divestiture and Acquisitions and Employee Benefits
Wagner Law Group P.C.
Mar. 25
Webcast
IRS and PBGC Audits of Defined Benefit Plans
American Society of Enrolled Actuaries [ASEA]
Mar. 25
Webcast
SECURE Act and Retirement Plan Administration: ERISA Compliance Issues for Plan Sponsors and Employers
Strafford
Mar. 26
Webcast
Free
Voluntary Fiduciary Correction Program
Employee Benefits Security Administration [EBSA], U.S. Department of Labor
Mar. 26
Webcast
Critical Challenges Facing Pension Withdrawal Liability
Lorman Education Services
Mar. 26
Webcast
Free
The Case for an Operational Review of Your 403(b) Plan
Strategic Benefit Services
Mar. 26
Webcast
Free
The SECURE Act's Impact on Estate Planning and Administration
Wagner Law Group P.C.
Mar. 26
Webcast
Free
SECURE Act: New Opportunities for Plan Sponsors and Participants
Williams Mullen

Most Popular Items in the Previous Issue

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BenefitsLink Retirement Plans Newsletter, ISSN no. 1536-9587. Copyright 2020 BenefitsLink.com, Inc. All materials contained in this newsletter are protected by United States copyright law and may not be reproduced, distributed, transmitted, displayed, published or broadcast without the prior written permission of BenefitsLink.com, Inc., or in the case of third party materials, the owner of those materials. You may not alter or remove any trademark, copyright or other notices from copies of the content.

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