Retirement Plans Newsletter

April 29, 2020

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View Coronavirus (COVID-19) News and Resources

[Guidance Overview]

The Impact of the CARES Act on 401(k) and Other Defined Contribution Plans

"Participant loans, hardship distributions, and certain limited purpose in-service distributions all allow participants to access funds in their retirement accounts while they are still working. The CARES Act contains several provisions that enable plan sponsors to provide plan participants with access to funds in defined contribution retirement plans and individual retirement accounts (IRAs) to pay for unanticipated costs associated with the coronavirus pandemic."

Mintz

[Guidance Overview]

Editor's Pick SECURE Act Initiates Groundbreaking Retirement Plan Change: Prohibition on Exclusion of Part-Time Workers

"[B]usinesses are now required to allow long-term, part-time employees to participate in employer-sponsored 401(k) plans.... Employees who are eligible due to the new rule can be excluded from nondiscrimination and coverage testing rules.... The SECURE Act also offers tax credits to cover plan startup and employee education costs.... The SECURE Act includes a tax credit up to $500 per year for plans that feature automatic enrollment."

Hall Benefits Law

Information Security and Your Organization's Retirement Plan

"[T]hings you can do today to help your employees and yourself: [1] Encourage online retirement account access ... [2] Document your retirement plan security policies and procedures ... [3] Monitor providers and vendors."

Principal Financial Group

How Saver and Employer Behaviors Are Evolving in Response to COVID-19

"Dollars contributed to retirement plans by employers and employees in March were 26% lower and 19% lower than projected, respectively, based on year-over-year trends.... [T]he number of employee distributions and new loans taken from retirement plans fell below monthly projections. Dollars requested per employee distribution and the number of employee hardship withdrawals aligned with monthly projections."

Ascensus

What Happens If Your Employer Suspends Its 401(k) Program?

"In a recent survey ... 1.3% of all responding organizations said they were ending their retirement plans. Organizations that have plans with fewer than 200 participants are ending their plans at a higher percentage: 3.6% of them said they would cancel their retirement plans.... [Another survey] found that approximately 200,000 small business retirement plans were at risk of termination."

Forbes

A 'Rosetta Stone' for Finding 401(k) Provider Fees

"The first step in calculating an all-in 401(k) fee is to identify all plan service providers -- because they're not working for free.... 401(k) service providers can be paid fees from three sources today -- the employer, participant accounts or plan investments. 401(k) fees paid by the employer or deducted from participant accounts are considered 'direct' fees, while fees paid by plan investments are considered 'indirect' fees.... At this point, you're ready to calculate your 401(k) plan's all-in fee. If your 401(k) plan pays no indirect fees to any service provider, you are lucky -- this calculation will be a piece of cake. You just need to add the direct fees to your plan's fund expenses."

Employee Fiduciary

Some Comforting Stats for Retirement Plan Investors

"Data from leading retirement plan recordkeepers shows 401(k) and IRA accounts have seen smaller losses than retail brokerage accounts, thanks in no small part to the efforts of plan sponsors and their advisers. Corporate pensions have also fared better than their public counterparts."

planadviser

Corporate Pension Funding Ratio at 87.5% at 2019 Year-End Despite Best Asset Performance in 16+ Years

"[T]he improvement in the market value of assets was offset by a huge 94 basis-point drop in discount rates, raising pension liabilities and causing the overall pension funding ratio for 2019 to climb only a few percentage points, from 87.1% at 2018 year-end to 87.5% as of December 31, 2019. Now four months into 2020, it remains to be seen how the recent market volatility from the COVID-19 pandemic and implementation of the CARES Act by Congress will affect these plans."

Milliman

[Opinion]

Coalition Comment Letter to Office of Information and Regulatory Affairs, on Default Electronic Disclosure by Employee Pension Benefit Plans Under ERISA (PDF)

"Instead of carefully considering how to make the disclosures more useful for participants, we believe DOL bypassed this goal and went straight to a proposed rule to mandate e-delivery as the default method of delivery for these critical documents.... The experience with online access of Social Security benefit statements and the proxy voting process for investments regulated by the SEC are but two examples showing steep declines in readership and participation following conversion to online distribution."

The Coalition for Paper Options

Benefits in General

[Official Guidance]

Text of EBSA COVID-19 FAQs for Participants and Beneficiaries (PDF)

16 pages; 23 Q&As covering health and retirement plan benefits, including:  [1] If my place of employment temporarily closes because of the COVID-19 outbreak, am I still covered by my employer's group health plan? [2] My employer's place of business is temporarily closed because of the COVID-19 outbreak.... Who do I contact to file a claim for benefits, or to obtain replacement identification documents? [3] I think I may be losing my health coverage as a result of the COVID-19 outbreak. What can I do to obtain other health coverage? [4] To preserve my right to receive group health coverage under certain health care coverage provisions, like COBRA and special enrollment periods, I have to provide documentation and notices to my plan within a certain timeframe. Are any of these timeframes being extended? [5] Can my employer terminate or reduce my health benefits at any time? [6] Can my retiree health benefits be terminated or changed? [7] Can I get money out of my retirement plan if I need financial assistance now? [8] Are there any downsides to receiving a pre-retirement distribution of my retirement benefits? [9] If my employer faces economic difficulties due to the COVID-19 outbreak, can my employer terminate my retirement plan, and if so, what happens to my benefits? [10] I haven't received a benefit statement from my 401(k) plan. When can I expect to receive it?

Employee Benefits Security Administration [EBSA], U.S. Department of Labor [DOL]

[Guidance Overview]

Editor's Pick Employee Benefits as Payroll Costs Under the Paycheck Protection Program

"As of the date of this posting, no guidance has been issued by the IRS or the Department of Treasury to further clarify what specific items qualify as payroll costs. In the interim, employers should consider applying a common-sense approach ... by limiting such expenses to payments made in the normal course of the employer's operations."

Haynes and Boone, LLP

Selected Discussions
on the BenefitsLink Message Boards

► It's easy to sign up and participate in discussions! Post answers, ask questions, create custom feeds and views. Join your peers (and potential referral sources or customers)—there is no charge.

What Mortality Table and Interest Rate to Use for a 50% J&S Annuity Under a Money Purchase Plan?

"I have been asked to calculate the 50% J&S for Money Purchase Plan participants. I am not finding any actuarial equivalent provisions in the document. What mortality and interest rate should I use?"

BenefitsLink Message Boards

New $100,000 Loan Ceiling Applies to a DB Plan?

"Does the temporary $100,000 loan limit (under the CARES Act) apply to defined benefit plans?"

BenefitsLink Message Boards

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Most Popular Items in the Previous Issue

Text of EBSA and IRS Final Regs: Extension of Certain Timeframes for Employee Benefit Plans, Participants, and Beneficiaries Affected by the COVID-19 Outbreak (PDF)
Employee Benefits Security Administration [EBSA], U.S. Department of Labor [DOL]; and Internal Revenue Service [IRS]

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Lois Baker, J.D., President  loisbaker@benefitslink.com
David Rhett Baker, J.D., Editor and Publisher  davebaker@benefitslink.com
Holly Horton, Business Manager  hollyhorton@benefitslink.com

Article submission: Online form, or email to news.editor@benefitslink.com

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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