COVID-19 and Retirement Plan Concerns
March 24, 2020
The world is a much different place than it was last month. The impacts of the COVID-19 virus are widespread and may prove to be long-lasting as well. Beyond the obvious health concerns, financial markets are in turmoil, reflecting the general uncertainty and dread in our nation as this all unfolds.
As business owners, you are all aware of the specific challenges that face you and your industry. Added to that, you are all retirement plan sponsors, which involves an additional set of considerations. These considerations will vary somewhat based on the type of plan you sponsor and your specific situation, but here are a few general thoughts:
- Contribution requirements – While some retirement plan contributions are discretionary, a certain level of contributions may be required under IRS requirements. The options we have available to reduce or eliminate these requirements going forward erode the later in the year it gets. If these contribution requirements may pose a challenge to you or your business, please contact your IAI consultant right away to discuss potential courses of action.
- Participant inquiries – Especially with 401(k) / profit sharing plans, you are likely to have concerned employees asking you about such things as investment options, participant loans, hardship withdrawals, etc. Remember that your plan’s Summary Plan Description (SPD) is a good place to find answers. If you’re unsure how to respond to a participant inquiry (or where your SPD is), feel free to reach out to your IAI consultant.
- Emerging legislation –Congress is working feverishly to draft and propose legislation addressing various concerns given the current environment, including retirement-related legislation. For example, we have already seen proposed legislation concerning Required Minimum Distributions (RMDs) and inherited IRAs. We will do our best to keep you apprised of legislation that may impact you and your plan as it emerges. [Update: Since the writing of this letter, the Coronavirus Aid, Relief and Economic Security (CARES) Act has become law. Read more about the Act, as well as other Coronavirus-related topics, on our new COVID-19 Resources page.]
Bottom line: If you have questions or concerns about your plan, please reach out to us and we will respond as soon as we are able. We will not charge you for our time spent sorting this out with you, within reason. You have enough to worry about with your own business; let us take some of the burden when it comes to your retirement plan.
-Steve Diess, President, IAI