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March 25, 2020 logo logo
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View Coronavirus (COVID-19) News and Resources
NEW: Upcoming Coronavirus (COVID-19) Webcasts

COVID-19 Retirement Plan FAQs for Employers

"Does the COVID-19 emergency satisfy the requirements of an immediate and heavy financial need for a hardship distribution? ... Can our plan permit in-service withdrawals, other than for hardship, that are not subject to the 10% early termination penalty tax? ... Are there restrictions on whether we can approve an employee's loan request? ... Do we have to continue withholding elective deferrals and remitting those contributions? ... Our company is struggling financially in connection with the COVID-19 emergency. We are considering layoffs. Could layoffs potentially affect our retirement plan?"

Troutman Sanders


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401(k) Hardship Distributions Likely to Take on Increased Importance During the COVID-19 Pandemic

"401(k) plan sponsors can expect to see a significant increase in employee requests to withdraw funds from their plan accounts. Federal tax laws ... (and most 401(k) plans), permit limited withdrawals in the event of a participant's financial hardship. The hardship distribution rules were substantially amended in 2018 and 2019[.]"

Bond, Schoeneck & King

Hardship Withdrawals Amid the COVID-19 Crisis

"[Three] states have been declared major disaster areas ... [T]his declaration means that certain plan participants may be eligible for 'deemed' hardship distributions from their plan account." [Updated Mar. 24, 2020]

Morgan Lewis

Using 457(b) Unforeseeable Emergency Distributions During the Coronavirus Crisis

"If a 457(b) plan distribution meets the rules [for a distribution to address an 'unforeseeable emergency'], it is not subject to 10 percent early-distribution excise tax that currently applies to 401(k) plans and IRAs. It also does not need to be repaid like a plan loan -- good in a real emergency."

Best Best & Krieger LLP

Suspending or Reducing Safe Harbor Contributions Contributions in Defined Contribution Retirement Plans

"An employer can reduce or suspend its safe harbor contributions during a plan year, but only if certain conditions are met."

Wagner Law Group

COVID-19 Layoffs May Cause a Partial Termination

"Usually, the determination of a partial termination is made on a plan year basis, but a partial termination could overlap more than one plan year, depending upon the circumstances.... If an employer waits to make the determination until the end of the plan year and it is determined that a partial termination has occurred, the employer will need to reinstate the forfeitures of affected participants who were not fully vested when they took a distribution of their accounts earlier in the plan year."


COVID-19 Sparks Interim Valuations for ESOPs

"Many ESOPs ... have annual valuations as of December 31. Most of these year-end valuations are currently in-process, but cannot take into consideration the current economic downturn because it was not reasonably foreseeable as of December 31, 2019.... The decision to declare an interim valuation date is a fiduciary decision that must be made in the best interest of plan participants and beneficiaries, including participants who have terminated employment."

Ballard Spahr

Markets 2020: Effect on PBGC Variable-Rate Premiums and Strategies to Reduce Them

"While interest rate declines in 2019 were significant, and generally increased liability valuations for purposes of the 2020 variable-rate premium/UVB calculation, much (in some cases, all) of that increase was offset by increases in asset values -- the S&P 500 was up over 25% for 2019. The story thus far in 2020 is, obviously, different, and something of a moving target."

October Three Consulting

Corporate Pension Plans in the Time of COVID-19

"Maintain hedging program and rebalance hedge ratios back to target ... Consider shifting a portion from STRIPS and long Treasuries to long credit if hedge ratio allows ... Raise cash for benefit payments ... Strategically rebalance back towards equity targets."


Why Staying Invested in a Downturn Can Help Your 401(k) Recover Faster

"Research shows that the worst days for the market are often closely followed by the best days. For retirement investors, staying in the market means you’ll be ready for those big gains. Data from the financial crisis show just about how long it took investors who stayed in to recover."


SECURE Act: Individual Annuities in Retirement Plans

"[The SECURE Act] presents new and potentially vast opportunities for individual annuity carriers.... Guaranteed income fund products do still expose the fiduciary to risk and liability associated with the financial capability of the insurance companies to support the guarantee ... Having multiple insurers supporting the guarantees helped address this."


Executive Compensation
and Nonqualified Plans

Editor's Pick Section 409A v. COVID-19: How Employers Can Navigate Nonqualified and Executive Compensation

"Section 409A was added to the Internal Revenue Code to restrict the ability of nonqualified plan participants from canceling their deferral elections and accelerating payment. Section 409A and other corporate reforms also restricted the ability to accelerate stock options and revise incentive plan performance goals and payouts.... [W]hen an extraordinary, unforeseen event ... such as COVID-19 comes along, these measures actually could discourage executives and inhibit the ability of the employers to tie pay to performance."

Porter Wright Morris & Arthur LLP

COVID-19 Impact on Executive Compensation

"[Many] compensation arrangements provide for partial or full vesting or payment of amounts upon an employee's termination of employment or separation from service. Although many employees have experienced a significant decline or cessation of work in connection with the COVID-19 outbreak, such employees may not have necessarily had a separation from service or termination of employment under the terms of the applicable compensation arrangement."


Coronavirus Crisis Raises Executive Compensation Concerns

"Annual bonus payouts will be reduced or eliminated by the negative short-term economic climate, and LTIP awards will be handicapped at best, and in many cases, rendered completely worthless. Employers may also be facing a restructuring or bankruptcy.... [It] is imperative that organizations find alternative methods to motivate and retain key executive talent[.]"

Alvarez & Marsal

Selected Discussions
on the BenefitsLink Message Boards

Retroactive Amendment to Implement Safe Harbor Status

"Let's say a sponsor halfway through a plan year wishes to retroactively amend the plan document back to the first day of the plan year to be a Safe Harbor Match plan. Specifically, they wish to amend the plan to change the eligibility requirements for safe harbor contributions and deferrals to go from 1 year/1000 hours to immediate entry. If they make this amendment, will they have to make up contributions for employees who did not defer but may have decided to defer had they had the opportunity to do so plus the safe harbor allocation?"

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Press Releases

Upcoming Events About Retirement Plans or Executive Compensation

Mar. 26
IRA Transfers and Rollovers
Mar. 26
What are the Impacts to ESOP Companies from the Economic Instability
Beyster Institute
Mar. 26
Voluntary Fiduciary Correction Program
Employee Benefits Security Administration [EBSA], U.S. Department of Labor
Mar. 26
COVID-19 - Considerations for Employers
Eversheds Sutherland
Mar. 26
Market Perspectives for Fiduciaries
Mar. 26
Critical Challenges Facing Pension Withdrawal Liability
Lorman Education Services
Mar. 26
COVID-19 Weekly: Navigating the Coronavirus
Mar. 26
Navigating Employee Benefits in an Evolving COVID-19 Pandemic
Multnomah Group
Mar. 26
The Case for an Operational Review of Your 403(b) Plan
Strategic Benefit Services
Mar. 26
COVID-19 Impact on Employee Benefit Plans
Trucker Huss
Mar. 26
The SECURE Act's Impact on Estate Planning and Administration
Wagner Law Group P.C.
Mar. 26
SECURE Act: New Opportunities for Plan Sponsors and Participants
Williams Mullen
Mar. 27
Managing through the Crisis: Expert Insights for Plan Sponsors
The Plan Sponsor University [TPSU]
Mar. 27
Retirement Considerations in a COVID-19 Environment
Thompson Hine LLP
Mar. 31
Helping Your 401(k) Participants Weather the Economic Storm
Groom Law Group
Apr. 1
The SECURE Act: Key Issues for Benefits Lawyers and Their Clients
American Law Institute Continuing Legal Education Group [ALI CLE]
Apr. 1
Plan Mergers & Terminations: When We Need to Say Goodbye to a Plan
American Society of Pension Professionals & Actuaries [ASPPA]

Most Popular Items in the Previous Issue, Inc.
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Lois Baker, J.D., President
David Rhett Baker, J.D., Editor and Publisher
Holly Horton, Business Manager

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BenefitsLink Retirement Plans Newsletter, ISSN no. 1536-9587. Copyright 2020, 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, 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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