Coronavirus (COVID-19) Resources
Resources for Your Employees and Your Business
The recent outbreak of the Coronavirus (COVID-19) in the United States will have a significant impact on some business and their employees, and we’ve put together this page as a resource for you during this uncertain time.
On Friday, March 27, the CARES Act was enacted into law. This new legislation creates optional distribution and loan provisions that each plan sponsor can choose to adopt. These changes are optional and are not required. So participants should check with their employer before making their Coronavirus-Related Distribution or loan request.
Coronavirus Retirement Plan FAQ
How can my employees access the funds from their retirement accounts?
Under the new CARES Act, your employees have new options for withdrawing money from their account:
- Coronavirus-Related Distribution
- the participant, the participant’s spouse, or one of their dependents must be diagnosed with COVID-19; or…
- the participant must have suffered adverse financial consequences due to reduced work hours, being furloughed, being laid off, unable to work due to lack of childcare, loss of business, or the business they owned or operated was forced to close due to COVID-19
- Loan – Increase limits up to the lesser of 100% of their vested account balance or $100,000
How long does it take for my employees to receive money after they've submitted a request?
Your employees can choose from either check or ACH direct deposit.
- Regular Mail – up to 10 business days
- UPS Next Business Day – 1 business day
- ACH Direct Deposit – 1 business day
How do my employees request a loan?
How do my employee request a withdrawal?
Your employees can request a withdrawal through their online retirement plan account or they can contact our support team for assistance – firstname.lastname@example.org or 1-800-858-6989.
After their withdrawal request has been received, we will send the authorized employer representative the request for e-signature approval.
What's the maximum amount an employee may request as a loan?
Under current law, employees can request 50% of their vested account balance – capped at $50,000.
However, Congress is currently working on a bill that is expected to raise the cap to $100,000.
Can I suspend or eliminate my company's matching contributions?
Yes, you can stop or suspend your company’s matching contributions. However, Safe Harbor matching contributions have special rules that must be followed if you plan to suspend or eliminate them. One of those rules is that employees must be given a notice at least 30 days in advance of the match being stopped.
There may be better alternatives to stopping or suspending your match. For example – if your match is required each pay period, your plan could be amended to make matching contributions at the end of the year instead. This would keep your plan’s safe harbor status in tact and would still satisfy your plan’s Top Heavy Minimum requirements.
Talk to our team if you’re considering suspending or eliminating your match.
Are there any retirement plan consequences for laying off employees?
If more than 20% of your employees is laid off or terminated in a single year, you could trigger what’s known as a partial plan termination (PPT). A PPT requires the affected participants to become immediately 100% vested in their account balance, regardless of your plan’s vesting schedule.
Can I suspend or stop my company's match?
Yes, but there are several details that must be carefully navigated to maintain compliance during this process. Please contact a member of our team for guidance.
Does Furlough Pay Count For Retirement Plan Deductions and Contributions?
Yes, unless you specifically exclude this type of pay from the definition of compensation in your plan document. There’s no current IRS guidance around this issue so you will need to work closely with our team on this issue to understand some of the risks involved with excluded certain types of compensation.
Do my employees have to take a Required Minimum Distribution for 2020?
No – The CARES Act, which was enacted on March 27, 2020 waives the 2020 RMD requirement.
Market Volatility Guide
It’s important to stay level-headed with your retirement account during times of economic stress. Check out our Market Volatility Guide to help you during market swings.
Know What You’re Looking For? Most Requested Topics.
Plan Sponsor Support