Important Considerations for 401k Plan Sponsors Impacted by COVID-19
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Click here for Coverage of the Coronavirus Pandemic and 401k PlansIn This Issue
General Items Important Considerations for 401k Plan Sponsors Impacted by COVID-19 As guidance continues to be released and legislation continues to be proposed and enacted into law, it is important for employers who sponsor 401k plans or other tax-qualified defined contribution plans to understand critical stress points and administrative issues that will likely arise as sponsors and participants face these uncertain times. Source: Mmmlaw.com Fiduciary and Plan Governance Lawsuits Reveal the Risk Issues for 403b and 401k Plan Fiduciaries The underlying theme of that allegation charges executives and managers who hire the plans' service providers with insufficient oversight and breaches of their ERISA fiduciary duty. Hidden beneath the excessive fee complaint, however, are several risk issues that are consistently found to exist in the audits of fiduciary management systems. Source: Rolandcriss.com »» Click here for more Fiduciary and Plan Governance Material Items of Special Interest to Service Providers Helping Plans and Participants Respond to the COVID-19 Challenge The spread of the Coronavirus, and the measures to keep it under control, have caused dramatic changes in the financial environment underpinning retirement plans. A recent Plan Sponsor Council of America webinar discussed what it means for plans and participants. Source: Napa-net.org 403b Plans Reminders About 403b Plans and Hardship Distributions This is a reminder about two compliance issues that might need plan sponsor attention at this time: the March 31, 2020 deadline for correcting 403b plan documents and the need for operational compliance with hardship distribution procedural changes for 401k and 403b plans. Source: Segalco.com Deadlines Extended for 403b Plans The IRS is extending the last day of the initial remedial amendment period for 403b plans from March 31, 2020, to June 30, 2020. Plan sponsors now have until June 30, 2020, to update their pre-approved and individually designed 403b plan documents. Source: Irs.gov »» Click here for More 403b Material Court and Legal 401k Lawsuits Keep Coming, Despite COVID-19 The pace of 401k litigation does not yet appear to be slowing. In the past week, Wells Fargo was sued over the use of proprietary funds in its retirement plan. A case was also filed against BOK Financial, and there was a major development this week in a lawsuit against Walgreens. To help reduce the spread of COVID-19, most federal courts are working remotely. Unless the courts are further hampered by the virus, with fewer judges available, for example, cases filed under ERISA might well not be delayed. Source: Investmentnews.com (registration may be required) Suggested Administrative Practices in Light of Intel Decision - Ensuring "Actual Knowledge" What practices may be employed by fiduciaries to ensure that participants are reading communications and disclosures and have the requisite "awareness" of their contents? As of this writing, the best understanding of this requirement is that a plan fiduciary should do what it can to promote effective communication that encourages participants to read plan notices and disclosures. But, there will be an evolution of industry best practices in response to Intel, subject as always to the facts and circumstances of each unique situation. Source: Wagnerlawgroup.com »» Click here for more Court and Other Legal Issues Legislative and Washington DC Trump Signs Coronavirus Stimulus Legislation With Retirement Relief Into Law President Trump signed into law the sweeping $2 trillion stimulus bill that includes retirement relief provisions. the retirement-based provisions stick closely to what was initially proposed by Senate Majority Leader Mitch McConnell, including provisions to ease retirement plan hardship and loan rules to free up funds for individuals impacted by the pandemic and to provide relief from the required minimum distribution rules. Source: Asppa.org The CARES Act and Its Impact on Retirement Plans The CARES Act is a very extensive piece of legislation that is meant to provide emergency assistance to large and small distressed businesses, to stabilize the U.S. economy that has been hammered by this pandemic. This bill covers a lot more of the highly publicized economy provisions. This article specifically focuses on the provisions that directly impact tax-qualified retirement plans. Source: Findley.com CARES Act: Employee Benefits Implications Congress has passed the CARES Act to help combat the impacts of COVID-19. This article is intended as a high-level overview of the employee benefit provisions of the Act. There are ambiguities and clarification on some of the details is still needed. Source: Clarkhill.com CARES Act: Retirement Plan Provisions for Employers and Plan Administrators This legislation contains several important provisions for employers and plan administrators regarding their retirement plans. The article discusses special withdrawal, loan, and required minimum distribution provisions in the CARES Act. Source: Pbwt.com »» Click here for more on Legislative and Washington Actions Cyber and Plan Security Securing Retirement Plans: Cybersecurity Best Practices Plan sponsors and their fiduciaries should consider taking proactive steps to protect their participants and their plan assets. This article reviews retirement plans cybersecurity best practices plan sponsors should consider adhering to safeguard against cyberattacks. Source: Planpilot.com »» Click here for more on Cybersecurity Issues Compliance and Regulatory 2020 Defined Contribution Plan Compliance Calendar This calendar is designed to provide a general overview of certain key compliance dates and is not meant to indicate all possible compliance dates that may affect your plan. Source: Findley.com Accessing Retirement Plan Funds Under CARES Act and Existing Law This publication provides an overview of the frequently asked questions for plan sponsors who want to provide employees with increased access to their retirement funds in light of personal financial challenges caused by the coronavirus outbreak. It addresses options to reduce or suspend elective deferrals and liberalize distribution and loan options to plan participants under existing law as well as under the CARES Act. Plan sponsors need to understand how the new distribution provisions under the CARES Act impact their retirement plans. Source: Icemiller.com Layoffs, Reductions in Force, and the 401k Plan Many business owners, employment law counsel, and benefit advisors are grappling with reductions in force/layoffs due to the unprecedented business and economic impact of COVID-19. This article briefly reviews a retirement plan compliance issue that these staff reductions can trigger. The rule applies to all qualified retirement plans, not just 401k plans. Source: Eforerisa.wordpress.com How DC Plans Should Prepare for Missed Loan Repayments The significant economic tremors, including income insecurity and job reductions, stemming from the coronavirus pandemic may lead to increased loan defaults and impact long-term retirement readiness. Plan sponsors have some ability to facilitate repayments and minimize defaults for participants who are unable to make loan repayments. Source: Callan.com 401k and 403b Hardship Distributions and COVID-19 Declared Disaster Areas The Federal Emergency Management Agency has declared several disaster areas around the United States as a result of the spread of the coronavirus. Under final regulations issued in 2019, a federal disaster declaration has become one of the safe harbor reasons that qualify a 401k or 403b plan participant for a hardship distribution, so it appears that plan participants may now be able to take a hardship withdrawal if they are laid off, put on an unpaid leave of absence or incur other expenses and losses on account of COVID-19. Source: Beneficiallyyours.com Hardship Distributions in the Time of COVID-19 As temporary layoffs and furloughs become more prevalent during the COVID-19 outbreak, employers have been asking whether they may allow employees to take hardship distributions under their Section 401k plans for expenses and losses resulting from COVID-19. Guidance is provided in this short article. Source: Workforcebulletin.com »» Click here for more Compliance and Regulatory Material
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