As the world grapples with the global outbreak of COVID-19, many employers have questions about their benefits compliance obligations pertaining to employees who may be affected by the virus. While we will attempt to address at a high level some of the issues that have been brought to our attention, it’s important to note that employers should consult with legal counsel about any specific legal obligations they may have in conjunction with their business plans.

Business Continuity Planning Checklist

On Wednesday, March 18, 2020, the president signed HR 6201, the Families First Coronavirus Response Act (the FFCRA), which contains several different provisions (also called Acts), which are now law. The new law will have a significant impact on employer benefits and leave policies, particularly for those employers with fewer than 500 employees.

Managing uncashed retirement checks may be considered a nuisance by plan administrators. Nevertheless, the employer still has fiduciary responsibility when a former employee fails to cash their distribution.

A look at past market declines shows that bear markets for the S&P 500 Index occur about once every six years. Once in a bear market, they last, historically, for 401 days. While past results don’t guarantee future returns, markets have always recovered from past market declines.

A partial plan termination is presumed by the IRS to occur when 20 percent or more of a company’s employees are no longer eligible to participate in the plan in a determined span of time (typically one plan year, but it can be other spans of time based on facts and circumstances). Routine turnover during the year is generally not considered a partial plan termination.

Epidemics in the past have also led to sharp pull-backs in the markets. Over the long-term, however, the stock market has weathered past epidemics. The below chart looks at the historical returns of the S&P 500 Index during multiple epidemics over the last 40 years. Over the 6 and 12 month periods following an epidemic, the S&P 500 performance has, on average, been positive.

It may be advantageous for a plan sponsor to consider adopting a traditional safe harbor design for their retirement plan. Adopting a safe harbor retirement plan design permits an employer to essentially avoid discrimination testing (the testing is deemed met).

Over 40 percent of employers now offer at least a small retirement plan match to employees, who can help manage their financial wellness by taking advantage of this offer. Even if your employer only matches a small percentage, you’re losing money by not participating. But before you sign up for your company’s retirement plan, it’s important to know how to make the most of it. Here are a few tips that can help.

Target date funds (TDFs) — which rebalance investments to become more conservative as a fixed date approaches — are a convenient way for plan participants to diversify their portfolios and reduce volatility and risk as they approach retirement, making them an increasingly popular choice. However not all TDFs are created equal, and selecting and monitoring them can pose unique challenges for plan sponsors and fiduciary advisors.

Your retirement plan is a valuable resource for your employees and serves as a vehicle to attract and retain top talent. Ensuring plan success is crucial. Examining plan analytics can help evaluate its success.

Many plan providers struggle with deciding how many investment options to offer in their retirement plans. While people generally like to have lots of options when making other decisions, having too many plan options can potentially lead to poor investment decisions by plan participants.