This article is intended to help businesses better administer their employer-sponsored retirement plan(s).
Do your employees qualify?
As a direct result of the onset of the Coronavirus sweeping the nation, the government signed into law the Coronavirus Aid, Relief and Economic Security Act (CARES Act) on March 27, 2020. The intention is to bring relief to affected individuals whose financial stability has been threatened. The legislation is vast, complicated, and may create a situation where your employees have to weigh long-term financial success against their emotion-charged short-term situation. This is a very difficult, confusing, and scary time for your employees and our goal is to help you help them make good decisions for both their short-term and long-term financial health.
Providing a little bit of back history:
On December 20, 2019, legislators passed the SECURE Act in response to a national plight of shortfalls in retirement savings across all of America. Three short months later in response to a worldwide pandemic virus, the CARES Act was passed, which significantly increased the accessibility to retirement account savings for all of your employees. Under the CARES Act, employees will have the ability to access what has taken them decades to save and to use those funds to their own discretion. These provisions may provide a financial lifeline for some individuals and families, but they could also be misused, leading to financial devastation for others.
Do your employees qualify?
Are they “IMPACTED PARTICIPANTS”? The CARES Act requires that individuals must “Self-Certify” that they (MUST) meet one of the following requirements:
- Have they been diagnosed with Coronavirus/ COVID-19 or SARS-COV-2?
- Has their spouse or dependent been diagnosed with the virus?
- Have they been adversely affected financially due to termination of employment, furlough, layoff, reduction in work hours, or unable to work due to lack of childcare?
Each scenario has to be as a “direct” result of COVID-19 and a spouse’s or dependent’s employment termination does NOT qualify as a financial hardship.
Will your existing Plan provisions meet your employees’ needs?
Do you need to adopt the expanded CARES Act provisions? A retirement plan that currently offers a standard loan provision or Hardship Withdrawal provision may provide some help to your employees, but do they need the enhanced provisions of the CARES Act?
Adopting the CARES Act provisions is an important decision. You, as an employer, are in the best position to assess what is appropriate for your Plan and how your specific business situation may be impacting your employees’ personal financial situations.
Should you amend your Plan Document to add the CARES Act provisions?
Before deciding, please refer to PART 2- How the CARES Act can help or hurt your employees. Please feel free to call or email us with questions before you make any decisions regarding amending your Plan, if need a resource to provide personalized guidance to your employees, or if you would like to discuss this topic and how it relates to your Plan and employees in further detail.
SUITE(k) is a division of S.E.E.D. Planning Group focused on helping employers with retirement plan administration, fiduciary oversight, and employee education for a flat-fee
S.E.E.D. Planning Group LLC (S.E.E.D.)is a Registered Investment Advisor (RIA) with the Securities Exchange Commission. S.E.E.D.’s team provides investment fiduciary and fee-only financial planning services to clients. Our fees are disclosed, easy to understand, and not predicated on product sales.
Kerstin Driscoll leads our Business Retirement Plan Team. In her role as Retirement Plan Navigator, she provides fiduciary investment services to our business clients. Kerstin has accumulated over 30 years of industry experience. She holds a Bachelor of Arts degree in Pre-Law and a business minor from Penn State. Throughout her career, she has guided employers and retirement plan committees to design cost-effective retirement plans for their employees and their companies. To contact Kerstin, you can email her at firstname.lastname@example.org