COVID-19 FAQ for Plan Sponsors


Our thoughts are with our clients as we all adapt to this unprecedented, disruptive time. To help you understand your options and make decisions that best support your business and employees, we drafted the following as a resource for you and your leadership team. We have heard from many clients about a variety of challenges and have attempted to address the tough decisions you’re facing with ideas, information and support.

In what follows, we help to answer these critical questions:

  1. Is there a way to suspend employer contributions for a period of time to free up cash?
  2. Is there a way to suspend the plan for a period of time?
  3. Are any legislative measures being pursued to help employers?
  4. Are any legislative measures being pursued to help participants?
  5. What are my employees’ top concerns amidst historic market volatility and declining account balances?
  6. Are my employees near retirement likely to make changes to their accounts?
  7. Are plan sponsors liable for investment losses associated with COVID-19?
  8. Are there ways plan sponsors can help participants?
  9. How can we successfully lead in this new remote working world?
  10. How can Retirement Wellness Group help?

We invite you to reach out to us to further explore how we can help to free cashflow, provide more flexible benefits for your employees, navigate the investment world or simply provide perspective and advice on how to calmly traverse this unpredictable economic environment.

  1. Is there a way to suspend employer contributions for a period of time to free up cash?
    • Discretionary employer matching contributions may be stopped at any time. Reducing or eliminating profit sharing contributions is an option. For safe harbor plans, these employer contributions may be possible to stop after a 30-day notice has been delivered to employees. Certain provisions should be met on a case by case basis, so please contact us to explore this further with plan service providers.
  1. Is there a way to suspend the plan for a period of time?
    • Currently there is not a way to suspend a plan, only the ability to terminate the plan. This is a long process with many other implications that should only be considered as a last resort, so if this is a concern, a phone call with us is the next step.
  1. Are any legislative measures being pursued to help employers?
    • Yes, industry advocacy group (American Retirement Association) pushing for Defined Contribution plan funding relief, to help employers, especially small businesses, with the financial burdens related to Coronavirus.

  1. Are any legislative measures being pursued to help participants?
    • Yes, the Coronavirus Aid, Relief and Economic Security (CARES) Act was signed into law on Friday, March 27, 2020. 
    • Provisions of the CARES (Coronavirus Aid, Relief and Economic Security) Act
      • Hardship distributions – waives 10% early withdrawal penalty tax up to $100k if you, spouse or dependent is diagnosed with, or experiences adverse financial consequences as a result of, COVID-19.
      • Loans – doubles the current loan limit to lesser of 100k or 100% of participant’s vested balance. Outstanding loans can have repayment delayed up to 1 year.
      • Plan Amendments – permits plans to adopt new rules immediately.
      • Temporary waiver of Required Minimum Distributions (RMDs) for defined contribution plans – RMDs waived for 2020.
      • Single-employer DB Plan Funding – allowing companies more time to meet funding obligations by delaying any amounts due in 2020 to 2021.
      • Expansion of DOL authority to postpone certain deadlines – to include public health crisis, extending beyond current terrorist or military events.
  1. What are my employees’ top concerns amidst historic market volatility and declining account balances?
    • Janus Henderson conducted a survey from March 16-17 with 1,004 US adults representative of the country’s population.
    • Top concerns cited were: health (42%), economy (23%), day to day disruptions (17%).
    • Financial markets and investment losses cited by only 9% of respondents.
    • Approximately 72% of respondents who own stock had taken no action during market decline and 66% of all respondents believed the stock market will be higher in 12 months.

  1. Are my employees near retirement likely to make changes?
    • This should certainly be considered on case by case basis. We can help review the personal planning for your participants near retirement to help them. Some great perspective – since World War II, there have been 12 bear markets, defined as declines of 20% or more. The average time to recovery has been 24 months. We recommend using this period of volatility to truly understand risk appetite, and to generally stay the course if one has an appropriate level of risk in her portfolio.
    • https://www.cnbc.com/2020/02/27/heres-how-long-stock-market-corrections-last-and-how-bad-they-can-get.html



  1. Are plan sponsors liable for investment losses associated with COVID-19?
    • Generally, plans that allow participants to change their investments as needed, offer a diversified menu of investments, and continue to employ a prudent process to monitor and evaluate funds, will not be liable for market losses experienced by participants.
    • Further evaluation of the market conditions should be considered in situations involving a blackout period, such as from a platform transition or fund line-up change.

  1. Are there ways plan sponsors can help participants?
    • If employees are facing financial difficulty, permitting more access to plan assets through plan design changes may make sense. Access to loans, hardships withdrawals or in-service distributions may create more flexibility and cash flow options for participants in need.
    • As discussed earlier, the Federal government also passed legislation (in the CARES Act) to make current plan limitations more flexible, generally allowing more access to retirement funds with lighted penalties.
    • Reminding them to try not to panic is always good too. This is a long-term investment.

  1. How can we successfully lead in this new remote working world?
    • This is a big, complicated question. While working remote has certainly become more common, this situation is new and a giant experiment. One that isn’t always inclusive and carries with it unknown social and environmental challenges.
    • We found this Gallup guide, for leaders like you, insightful: COVID-19 Has My Teams Working Remotely: A Guide for Leaders
  1. How can Retirement Wellness Group help?
    • The first thing to note is we are here for you and your employees always. We have robust resources to help everyone in the best of times all the way through the worst and back. Sometimes just having access to the voice of an experienced, knowledgeable professional, who has seen a lot and can offer objective advice, helps create peace of mind.
    • Beyond the tools and resources, we’ve found relevant, digestible education can be helpful for all. Whether it’s related to managing your plan-level responsibilities or, as an employee, navigating through life, money, family and work, we are always happy to customize and deliver great content.
    • Call or email us anytime.


Please stay healthy, keep up the great work and know we are only a phone call away.

Warm regards,

Schuyler Mann, Managing Director & the Team at Retirement Wellness Group

email: team@rwg-retirement.com; phone: 949.757.1799

www.retirementwellnessgroup.com