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Retirement Plans Newsletter March 24, 2020 |
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Webcasts, Conferences Aligning ESG Investments and Trends with Participant Values
COVID-19 - Considerations for Employers
COVID-19 Impact on Employee Benefit Plans
IRA Reporting
Plan Sponsor Fiduciary Failures - Lessons Learned
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Discussions |
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This Newsletter:
BenefitsLink Health & Welfare Plans Newsletter:
Message Boards Digest:
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Suspending Employer Contributions Midyear "Plan sponsors using a safe harbor matching provision have the ability to reduce or suspend contributions if they meet [certain] criteria ... Employer discretionary match and nonelective contributions can be stopped at any time.... A plan with a fixed match or fixed employer contribution must be formally amended to remove provisions that describe the fixed contribution." CAPTRUST |
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[Sponsored]
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Telecommuting or working from home? We are here for you. Don't miss ASC's Fundamentals of Qualified Retirement Plan webcasts! Part 5 topics include Plan Documents, Plan Communications, IRS/DOL Audits and more. Register Now! |
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Layoffs, Reductions in Force, and the 401(k) Plan "[W]hen employer action -- including as a result of an economic downturn -- results in 20% or more of the plan population being terminated from employment, then a presumption arises that everyone affected must be fully vested in their employer contributions under the plan.... Fully vesting folks does not cost the employer money because the money is already in the plan. However if this is not done correctly it is a complicated and expensive fix 'after-the-fact.' " E is for ERISA |
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Coronavirus: The Impact on Retirement Plans This FAQ provides some high-level answers to some of the most common questions about: [1] Company contributions; [2] Employee deferrals; [3] Participant loans and distributions; [4] Employment and plan terminations; and [5] Miscellaneous plan administration items. DWC |
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COVID-19 and Governmental Retirement Plans "Given the critical nature of some jobs, can we rehire retirees? ... In the case of an emergency, can we allow for in-service distributions? ... How do we comply with open meeting and quorum requirements during this time? ... Is paid leave considered 'compensation' for plan purposes? ... How do we stay in contact with participants?" Ice Miller LLP |
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Investment Commentary and Outlook as of March 23rd "Credit spreads in particular continue to move wider as there is very limited liquidity, making it expensive for those who need to sell to do so. There are also relatively few natural buyers of credit right now given the level of uncertainty about default potential over the next several months. This could be mitigated somewhat by the Fed's announcement today that they'll buy bonds beyond government-related securities. At some point the level of defaults that are priced in will tempt us to take more risk in both credit and equity, but not yet." River and Mercantile Solutions |
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[Sponsored]
SPARK Global Public Policy Forum -- June 23-24, Washington DC
The retirement services industry's leading event: comprehensive agenda designed to meet the needs of 401(k) Plan Providers, Financial Advisors and Record Keepers -- focus on global retirement public policy and expansion of pension reform occurring worldwide. |
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"Under more normal circumstances, the historic performance of equities in 2019 would have given DB sponsors a much-needed funded status boost, which in turn would have helped accelerate progress down de-risking glidepaths. Instead, the largest 20 US-listed corporate DB sponsors experienced an equally historic rise in liabilities stemming from a crushing drop in discount rates. Global equities returned 27% in 2019 while discount rates fell around 100 bps, leading to a slight decrease of average funded ratio in this group from 85.3% to 84.9%. The funding deficit in dollar terms increased from $137 billion to $151 billion." Russell Investments |
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Good Time to Up Your Financial Knowledge Game "Stay healthy and stay away from others in the next few weeks. But, instead of sitting on the couch and watching all those 'Cheers' episodes, we encourage you to spend just a little bit of time in the next few weeks improving your financial knowledge, especially as it applies to your personal finances." Ken Steiner, FSA Retired |
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Coronavirus and Your Retirement Savings "Should I be worried about the volatility on Wall Street? ... Are we headed for a recession? ... What should I do with my 401(k)? ... What is the federal government doing to help?" Kiplinger |
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[Opinion] Mercer Urges Immediate Funding Relief for DB Plan Sponsors (PDF) "[We] suggest Congress take immediate action to: [1] Extend the due date for all required pension contributions -- including quarterly payments due as soon as April 15 -- that would otherwise be due during calendar year 2020, until at least the end of the year. [2] Suspend the requirement that certain plans' adjusted funding target attainment percentage (AFTAP) drop by 10% on the first day of the fourth month (April 1 for calendar year plans). [3] Extend the deadline for certain administrative tasks, such as preparing a PBGC 4010 filing (April 15 for employers with calendar-year fiscal years) and mailing the Annual Funding Notice to all participants (April 29 for calendar-year plans)." Mercer |
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[Opinion] "ARA is particularly interested in the following relief: [1] An automatic extension to October 15 for filing of the Form 5500 series for retirement plans with calendar year plan years ... [2] A 90-day extension to the deadline for correcting a failed ADP or ACP test and a 90-day extension of the period for distributing excess contributions and excess aggregate contributions ... [3] A 120-day extension of the defined benefit plan restatement deadline (currently April 30, 2020). [4] A 90-day extension of the 1099-R e-filing deadline for employers (normally March 31, 2020). [5] Reasonable relief from notices required to be provided to plan participants under Title I of ERISA." American Retirement Association [ARA] |
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Benefits in General |
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"There are a number of other tools in the Code or in employee benefit plans that may assist employers in helping their employees through the disruption of employment and any concurrent economic downturn. Employers making benefits changes in response to an economic downturn need to carefully communicate the change and how it impacts different groups of employees and the distinctions within workforces between furloughed, layoffs, and terminated employees to avoid miscommunication of the impact of the change on different groups of employees." Jackson Walker |
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Disability Claims Regulations and the COVID-19 Pandemic "[P]lan administrators and others involved in disability claims administration may wish to reevaluate the applicable [DOL] deadlines and requirements in light of present pressures on medical personnel, persons with serious health problems, and business disruptions.... Potential problems may include: [1] Difficulty obtaining in-person examinations ... [2] Difficulty retrieving or reviewing necessary medical records ... [3] Disruption of claim operations" Robinson & Cole LLP |
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Employer Cybersecurity Concerns for Employees Working Remotely "Employers are responding to COVID-19 by allowing, and even mandating remote working.... While increasingly common even before the virus, remote work brings its own unique set of cybersecurity challenges. Here are the ten most common pitfalls and the recommended solutions." Poyner Spruill LLP |
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Executive Compensation |
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"[1] Can or should companies make adjustments to their annual and long-term incentive plans in light of COVID-19 business impacts? ... [2] We were about to pay our 2019 annual bonuses but want to indefinitely delay payment given financial uncertainty caused by COVID-19. Will that delay cause any legal issues? ... [3] The COVID-19 crisis has caused our stock price to drop dramatically. What impacts could this have on our equity compensation program? ... [4] Can we permit participants to cancel deferral elections and/or receive distributions from our nonqualified deferred compensation plans?" Troutman Sanders |
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Recommendations for Compensation Committees During the COVID-19 Crisis "[1] Timing of compensation decisions ... [2] Bonus and equity award performance targets and metrics ... [3] Compensation committee discretion and adjustment of performance targets ... [4] Burn rate and pricing ... [5] Repricing ... [6] Compensation reductions/waivers ... [7] Overall flexibility." Skadden |
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Selected Discussions |
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Minimum Funding for Plans with with Prior Year Funding Deficiency "Before PPA a late contribution creating a FD for a plan year was added to the plan assets for the following year funding computations. Not clear as how PPA changed this rule. I have a pension plan that had a funding deficiency (FD) in 2018 plan year due to a late contribution of $30,000, which was deposited in Dec. 2019. For the 2019 plan year the valuation date is changed from EOY to BOY. Under 4(A)(ii), should the late contribution be included as a plan asset for funding purposes for 2019? SB instructions say not to include such contributions in line 2(a) [Market value of assets] or 2(b) [Actuarial Value of plan assets]." BenefitsLink Message Boards |
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Missed March 16 Due Date for Deductible Contribution "Any chance the IRS would provide relief for a plan sponsor (a partnership) that filed its 2019 partnership return on 3/16/20 but is now unable to fund the pension contribution reported as a deduction on the return? An extension was not filed. Given the situation with the coronavirus and the fact that the IRS announced today that April 15 filers have a 90-day extension to file returns, would the IRS permit a plan sponsor to keep the deduction if the deposit is made as soon as possible? If not, then could VCP or SCP apply?" BenefitsLink Message Boards |
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"I see there is talk about extension for the restatements. Is there any chance that the requirement to take the first RMD by April 1 will be extended?" BenefitsLink Message Boards |
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Press Releases |
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Ballard Spahr Launches COVID-19 State and Federal Legislation Trackers
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Upcoming Events About Retirement Plans or Executive Compensation |
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Most Popular Items in the Previous Issue |
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Hardship Withdrawals Amidst the COVID-19 Crisis
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Employee Benefits Issues in a Slowing Economy (PDF)
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COVID-19 and Withdrawal Liability
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