Retirement Plans Newsletter

April 1, 2020

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SECURE Act
RECORDED
Ascensus

Retirement Plan Participants: COVID-19 Impact
RECORDED
Multnomah Group

Review of the CARES Act: Defined Contribution Plan Provisions
RECORDED
Multnomah Group

Managing Through the Crisis: Impact on Plan Participants
April 3, 2020 WEBCAST
SPARK Institute

Business of Benefits Continues: Everything Has Changed. Yet Nothing Has Changed. Mercer Survey of Top 2021 Initiatives
April 8, 2020 WEBCAST
University Conference Services

Retirement Plan Impacts of the CARES and SECURE Acts
April 9, 2020 WEBCAST
University Conference Services

SECURE Act & COVID-19 Update
April 23, 2020 WEBCAST
Pension Education Council of Atlanta [PECA]

IRA Fundamentals
May 12, 2020 WEBCAST
Ascensus

IRA Beneficiary Distributions - Part 1
May 14, 2020 WEBCAST
Ascensus

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View Coronavirus (COVID-19) News and Resources
View Coronavirus (COVID-19) Webcasts

[Guidance Overview]

Extension of Restatement Deadlines for 403(b) and Defined Benefit Plans; Plan Loan Extensions Under CARES Act

"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."

Ferenczy Benefits Law Center

[Sponsored]

Clarified! IRS Restatement Cycles including COVID-19 extensions

Sponsored by ASC

ASC's free At-A-Glance Restatement Timeline clarifies DC Restatement Cycles including all its deadlines. COVID-19 deadline extensions for DB, Cash Balance & 403(b) Restatements clarified. Learn more


[Guidance Overview]

Retirement Plan Provisions in the CARES Act: Action Items for Plan Sponsors

"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."

Kushner & Company

[Guidance Overview]

Editor's Pick COVID-19 Plan Document and Administration FAQs

"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]."

ASC

[Guidance Overview]

Significant Retirement Plan Distribution and Loan Provisions of the CARES Act

"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."

PASI

[Guidance Overview]

The CARES Act Participant Loan Payment Suspension Rules

"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."

Business of Benefits

[Guidance Overview]

CARES Act Brings Much-Needed Relief (and New Obligations) for Benefit Plans

"[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."

Faegre Drinker

[Guidance Overview]

CARES Act and Defined Benefit Plans

"[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."

Spencer Fane

[Guidance Overview]

Special Distributions from Puerto Rico Retirement Plans and IRAs Are Extended to COVID-19 Victims

"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."

McConnell Valdes

The Coronavirus Crisis: What Plan Fiduciaries Should Do

"[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."

FredReish.com

Pandemic and Plan Service Providers: Chances Are, Your Business Continuity Plan Did Not Fully Address This

"[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."

The Wagner Law Group

Important Facts About 401(k) Plans (PDF)

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"

Investment Company Institute [ICI]

Trying to Solve the COVID-19 Crisis May Exacerbate the Future Retirement Crisis

"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."

Miller Johnson

Unraveling U.S. Retirement Savings: How a Global Pandemic Threatens to Undo Decades of Planning

"[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[.]"

Bryan Cave Leighton Paisner LLP

Benefits in General

[Guidance Overview]

CARES Act for Retirement and Health Plan Sponsors

"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."

Maynard Cooper & Gale

Selected Discussions
on the BenefitsLink Message Boards

401(k) Death Benefit Was Paid to Non-Spousal Beneficiary -- The Surviving Spouse Ain't Happy

"[1] Husband gets divorced and changes 401(k) beneficiary to his son. [2] Ten years later husband gets remarried, but fails/forgets/decides not to change the beneficiary to his new wife. [3] Husband dies unexpectedly. [4] Son claims benefits, and Fidelity pays him. Because it appears federal law allows for the wife to be the beneficiary unless she has signed a waiver allowing for someone else to be the beneficiary, she should be able to claim the deceased husband's benefits. Fidelity claims they can't do anything about it and has pushed the issue back to the employer. How I should unwind this situation?"

BenefitsLink Message Boards

SH Match Paid to Owners Only, Because No Other Participants Elected to Defer

"We have more than one small plan with SH match where only the owners defer and so only the owners get SH Match. They assure us that HCEs have been given the opportunity to defer. While technically okay, what position are other TPAs taking? Also, for one of these clients, they have a DB, PS and 401(k) -- Of about 8 participants only the 2 owners (H&W) defer. The 401(k) excludes HCEs from SH Match, so effectively this allows only the owners to defer with no ADP testing whatsoever. Again, technically acceptable but... Thoughts?"

BenefitsLink Message Boards

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The CARES Act: Plan Sponsor Action Items
Wilkins Finston Friedman Law Group LLP

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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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