COVID-19 Employee Benefit Plan Consulting
As the COVID-19 pandemic continues to alter the economic landscape, businesses are experiencing a new set of challenges with managing their Employee Benefit Plan programs. Moore Colson is here to help your company navigate these situations including, Coronavirus Aid, Relief, and Economic Security (CARES) Act questions such as Coronavirus Related Distributions (CRD) and Coronavirus Related Loans (CRL), evaluation for Partial Plan Terminations and strategies related to Employer Contribution Suspension.
CARES Act Questions, Including CRDs and CRLs
The CARES Act made a number of changes to federal law to afford “qualified individuals” affected by COVID-19 greater access to their retirement savings. While employer adoption of these distribution and loan provisions is optional, many Plan Sponsors who have adopted the new provisions are struggling with aspects of administration. Our team can help answer your questions and ensure that your processes and procedures are adequate to identify qualified individuals, retain sufficient records and administer these provisions appropriately.
Partial Plan Termination
When businesses terminate or lay-off a significant number of employees, a “partial plan termination” may have occurred in the eyes of the IRS. In such situations, the IRS requires employees covered under the plan to be deemed 100% vested in matching and other employer contributions. If the Plan Sponsor does not recognize that this has occurred, participants may be underpaid when distributions occur. These underpayments can result in the need for corrections or even disqualification of the plan.
While the IRS has not issued any additional guidance on this in the midst of the COVID-19 pandemic, plan sponsors need to carefully monitor these levels to determine appropriate treatment in the event a partial plan termination does occur. Our team can help ensure you remain compliant and guide you through the analysis and next steps.
Safe Harbor Contribution Suspension
Are you considering adjusting your Employer Match in light of current economic challenges? In certain situations, employers can reduce or even suspend their safe harbor match or non-elective contributions mid-year when a list of specific conditions is met. It is important to note that an election to exit out of the safe harbor status, if allowed, cannot be reversed later in the year; therefore, it would not be reinstated until 2021. Our team can help you decide whether to reduce or suspend Employer Contributions, including safe harbor match or non-elective contributions, and how to do so in a compliant manner.
If you need assistance with the CARES Act, Partial Plan Terminations or Employer Contribution Suspension, our experienced Employee Benefit Plan experts are available to help.