Fine-Tuning Implementation of the CARES Act

The IRS has issued two notices and a FAQ to clarify how defined contribution (DC) plan sponsors should implement the provisions of the act, touching on required notices, tax reporting, and recordkeeping

Callan Survey: DC Plan Response to CARES Act Varied by Industry and Recordkeeper

Callan conducted a survey in mid-April to assess what defined contribution (DC) plan sponsors have done in response to the CARES Act and the recent economic turmoil spurred by the pandemic. The survey includes responses from 63 non-government plan sponsors, and in general we found that their actions were primarily influenced by the industry they […]

Freezing or Suspending Matching Contributions: Requirements and Timing

DC plan sponsors hit hard by the recent economic environment are evaluating if reducing or suspending matching contributions is prudent. The presence of an employer match both supplements and encourages employee retirement savings. Background Plan sponsors have been more likely to decrease or suspend matching contributions during periods of economic hardship. This was seen in […]

Guidance on Substantial Workforce Cuts and DC Plan Terminations

Employers that reduce their workforce or discontinue defined contribution (DC) plan eligibility for certain employee groups may experience an inadvertent “partial plan termination.” If not properly managed, this event could result in a disqualification of the entire plan. Background A partial plan termination is typically triggered by a distinct event or series of events (e.g., […]

How the Coronavirus Relief Bill Affects DC Plans

The coronavirus relief bill, known as the CARES Act, seeks to address the recent economic tremors stemming from the coronavirus pandemic. Certain provisions look to liberalize loan and distribution availability for certain DC plan participants (i.e., “qualified individuals”). Background The CARES Act was signed into law on March 27. Drafting this legislation was expedited, which […]

Balancing ERISA Rules With Current Economic Concerns

Plan sponsors have traditionally sought to limit “leakage” from defined contribution (DC) plans. However, in these chaotic times, sponsors should consider how they can support participants in financial distress. Background The coronavirus pandemic has led to significant economic tremors, including income insecurity and job reductions. As a result, plan sponsors and participants are looking to […]

How DC Plans Should Prepare for Missed Loan Payments

Takeaway: 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. Background: Defined contribution (DC) plans have the option of offering loans to participants. Generally, the participant must repay a plan loan within five years (except for purchases of a primary […]

Supreme Court Defines ‘Actual Knowledge’ in DC Plan Suit

The Supreme Court in late February ruled that the statute of limitations for lawsuits alleging breach of fiduciary duty under ERISA will only be reduced to three years “when a plaintiff actually is aware” of the facts of a breach, “not when he should be.” Background: ERISA lawsuits alleging breach of fiduciary duty are typically restricted […]

Managing Turmoil: Tips for DC Plan Sponsors

Market volatility and fears of the coronavirus (COVID-19) have introduced novel concerns for many DC plans that have the potential to strain resources. Sponsors should consider what the impacts may be to the plan and how to mitigate them. So far, the coronavirus pandemic has led to travel restrictions, self-isolation, and quarantines, and has triggered […]

The Supreme Court Decides Not to Decide

The U.S. Supreme Court has an unusual number of Employee Retirement Income Security Act (ERISA) petitions before it in the 2019-20 term.