A Plan Sponsor’s
17 November 2020
The impact of COVID-19 has been felt by all in 2020 and many things have been but on the “back burner” as more pressing issues needed to be addressed. However, one thing that must stay on the top of all plan sponsors’ list is their retirement plan. As challenging as this year has been, certain things cannot be neglected.
Plan sponsors need to make sure they are staying current on recent changes due to the passage of the Setting Every Community Up for Retirement Enhancement (SECURE) Act, the Bipartisan Budget Act of 2018 (BBA) and the Coronavirus Aid, Relief and Economic Security (CARES) Act. Each of these Acts has had an impact on retirement plans and it is very important that plan sponsors know how these have impacted their plans and their participants.
This is also a good time to remember how critical it is to make sure contributions are remitted timely to your plan. Department of Labor (“DOL”) rules require that the employer deposits deferrals as soon as the employer can; however, in no event can the deposit be later than the 15th business day of the following month. Remember that the rule about the 15th business day is not a safe harbor for depositing deferrals; rather, that this rule set the maximum deadline. DOL provides a 7-business-day safe harbor rule for employee contributions to plans with fewer than 100 participants.
Plan Sponsors also need to make sure all annual disclosures have been made and that the Form 5500 (and audit if necessary) is filed timely. Failure to do so, can result in costly penalties.
Also, with so much uncertainty in the market, now is a good time to review your plan investments with your advisor and determine if your current investments are still working for your plan or if changes need to be made. Now is also a good time to review plan expenses paid by your plan. Plan sponsors are held to a high standard of care and diligence and must discharge their duties solely in the interest of the plan participants and their beneficiaries. This includes: establishing a prudent process for selecting investment options and service providers; ensuring that fees paid to service providers and other plan expenses are reasonable in light of the level and quality of services provided; selecting prudent and adequately diversified investment options; disclosing plan, investment, and fee information to participants to make informed decisions about their investment options under the plan; and monitoring investment options and service providers, once selected, to make sure they continue to be appropriate choices.
Now more than ever, it is important that you ensure that you are taking your duties as plan sponsor seriously in order to make sure your employees continue to save for retirement.