One-Fifth of Large Retirement Plan Sponsors Say They Are Suspending 401k Matches
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Insight: Studies, Research, and White Papers One-Fifth of Large Retirement Plan Sponsors Say They Are Suspending 401k Matches Just weeks after implementation of the CARES Act, some sponsors of DC retirement plans are acting preemptively in front of what is expected to be record slowing of economic activity in the second quarter. Among 152 sponsors surveyed by the Plans Sponsor Council of America, 21.7 percent of sponsors with 1,000 or more participants in their retirement plans have either suspended or are considering suspending employer matches to those plans. Source: Treasuryandrisk.com »» Click here for More Studies, Research, and White Papers General Items More Cuts to 401k Matches are Coming To conserve cash, some employers are suspending contributions to their workers' 401ks. And if this downturn plays out like previous recessions, more will follow. The handful of employers announcing suspensions in recent weeks include travel companies and retailers hit first and hardest by shrinking consumer demand, including Amtrak, Marriott Vacations Worldwide, the travel company Sabre, Macy's, Bassett Furniture Industries, Haverty Furniture Companies, and La-Z-Boy. Source: Bc.edu Coronavirus Crisis Workforce Reduction Can Adversely Affect Retirement Programs While payroll-reducing strategies may be necessary during this time of substandard revenue, they may also present other costs or hurdles in the company's pension, retiree medical, and retiree life insurance programs. Significantly changing employee demographics can trigger unexpected accounting, cash flow, and compliance issues that could be an unwelcome surprise given current market conditions. Source: Findley.com Fiduciary and Plan Governance The Fiduciary Angle to the Participant COVID Certification Because of Spousal Employment Loss The determination of whether or not an individual qualifies as a COVID participant would usually be a determination that requires the exercise of discretion by a fiduciary, under ERISA Section 3(21). But the CARES' participant certification rule adds an odd twist into the mix. Source: Businessofbenefits.com »» Click here for more Fiduciary and Plan Governance Material Target-Date Funds Are Your Target-Date Funds a Prudent Investment? COVID-19 Puts Spotlight on Fiduciary Choices COVID-19 may have accelerated a reckoning for fiduciaries who have not fulfilled their responsibilities for target-date fund selection. Those who simply selected their vendor's funds without investigation and financial firms that selected their proprietary funds for their plans, especially funds without good track records, are probably most at risk. However, fiduciaries with exposure can begin to reduce that exposure by reviewing their selections and implementing a prudent review process. Here are some questions frequently asked about target-date fund selection. Source: Cohenbuckmann.com »» Click here for more on Target-Date Funds Court and Legal New Lawsuit Alleges Fiduciary Breaches for Quarter Million Dollar Cybertheft A recently-filed lawsuit describes in specific detail the efforts cybercriminals often take to pilfer assets from retirement accounts. As a complaint, the filing provides only the plaintiff's version of what happened, and we have not yet heard from the defendants. But the complaint is particularly interesting in its description of how the theft occurred and may point to some useful approaches to try to reduce future fraud. Source: Groom.com Liberty Mutual Sued Over Its 401k Liberty Mutual is facing a class-action lawsuit brought by its 401k participants, who allege the plan's recordkeeping fees were out of control and the insurance giant allegedly violated ERISA by failing to rein them in. Source: Investmentnews.com (registration may be required) 401k Plan Participants Say Fiduciaries Ignored Excessive Fees In a lawsuit targeting the Pharmaceutical Product Development Retirement Savings Plan, the plaintiffs allege that fiduciaries of the plan violated their duties under ERISA. They say the plan fiduciaries failed to objectively and adequately review the plan's investment portfolio to ensure each investment option was prudent in terms of cost and maintained certain funds in the plan despite the availability of identical or similar investment options with lower costs and/or better performance histories. Source: Planadviser.com »» Click here for more Court and Other Legal Issues Compliance and Regulatory 401k Plan Sponsors, Make Sure Your Plan Document Doesn't Cost You As a plan sponsor, there are many things you don't know about your plan document and you really should. Why? Because the plan documents could be a major culprit in what ails your 401k plan. Here are five items you should be considering. Source: Jdsupra.com IRS Extends the Form 5500 Due Dates for Some Employee Benefit Plans The Internal Revenue Service has broadened the filing and payment relief provided under prior guidance. IRS Notice 2020-23 postpones, among other relief, the due date for employee benefit plans required to make the Form 5500 series filings due on or after April 1, 2020, and before July 15, 2020. Plans with original due dates or extended due dates falling within this period now have until July 15, 2020, to file their information reports. Source: Benefitslawadvisor.com A Checklist for Sponsors to Consider Before Adopting Retirement Plan Provisions of the CARES Act Although some retirement plan recordkeepers and TPAs have reached out to plan sponsors on decisions regarding the optional provisions of the CARES Act, e.g., coronavirus-related withdrawal and loan relief options, others are waiting for additional guidance. Here is a checklist of issues to consider to help you navigate decision-making concerning optional CARES Act changes and determine whether your TPA has procedures in place to ensure compliance with the CARES Act provisions. Source: Huschblackwell.com The CARES Act: Special Distributions to Qualified Participants This article discusses a second provision of the Act that can help participants who are affected by the coronavirus (called "qualified individuals"). This is a special coronavirus-related distribution. Though discussed this in the context of 401k plans, the CRD provision applies to all qualified plans, 403b plans, and IRAs as well. Source: Fredreish.com COVID-19 and Employee Benefit Plans: An Action List for Employers New COVID-19 related federal legislation is leading many employers to review their benefit plans and related obligations. This checklist was created to help employers understand what issues to consider and possible actions to take. Source: Boutwellfay.com Enforcing the $100,000 Coronavirus Related Distribution Limit on Multiple Plans The $100,000 limit on coronavirus related distributions under the CARES Act is both an individual limit and a plan limit. Tracking and enforcing the $100,000 limit has the potential to create special compliance issues for employers and controlled group affiliates that sponsor more than one retirement plan and have individuals with an account balance under more than one of those plans. Source: Morganlewis.com Delving Into CARES Act Relief for Retirement Plan Participants The CARES makes it easier for retirement plan participants affected by the pandemic to use their savings to regain their financial footing. For affected participants, the act lets DC plans offer special in-service "coronavirus-related distributions," doubles the maximum loan amount plans can make and allows suspension of loan repayments for the remainder of 2020. IRS has yet to issue any guidance on the CARES Act's retirement provisions. However, IRS Notice 2005-92 provides guidance on essentially identical relief under the Katrina Emergency Tax Relief Act. Absent any later guidance to the contrary, employers may look to that notice for direction. Source: Mercer.com »» Click here for more Compliance and Regulatory Material Marketplace News Pentegra Waives Coronavirus Amendment Fees »» Click here for More Marketplace News
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