Coronavirus and Your Company’s Retirement Plan

As more states respond to the Coronavirus by ordering people to shelter in place and closing nonessential business operations, commerce is screeching to a halt. Millions of Americans are being forced onto unemployment rolls, anxiously awaiting their next paycheck and, at least momentarily, postponing saving for retirement.

By Una Morabito

While workers put thoughts of retirement on hold, employers have no such luxury. Sponsors of retirement plans such as 401(k)s must continue to meet their fiduciary duties even during this time of unprecedented business interruption.

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MassMutual realizes that businesses of all sizes have much more to worry about than simply the viability of their company’s retirement plan.  After all, if your business doesn’t survive the pandemic, sponsoring a retirement plan becomes moot. 

That’s why MassMutual is here to support you and help you meet your obligations. We have several resources in place to help you manage through what can realistically be called a crisis:

  • Our relationship managers and client managers are available for consultation on a wide variety of topics, including fiduciary and regulatory obligations, updates of any regulatory relief that might become available from federal or state governments, and answering any questions you might have about retirement plan topics.
  • A Sponsor Services article (Your Retirement Plan and the Coronavirus) for quick reference to help answer many of your more fundamental questions about your continuing responsibilities as a retirement plan sponsor.
  • A podcast you can download here summarizing the key points of the CARES Act.
  • The MassMutual Fiduciary Calendar, which publishes key regulatory dates and deadlines for defined contribution plans such as 401(k)s and defined benefit plans such as pensions and cash balance plans.

In addition, you can also reach out to your retirement plan advisor or third party administrator (TPA) for insights about how best to continue to meet your obligations as a retirement plan sponsor. Financial services has been broadly endorsed as an essential function as different states order a long list of businesses to shut down.

All of those resources can potentially become invaluable as employers continue to have a wide variety of retirement plan considerations to keep in mind as you manage through a business slowdown or shutdown:

  • Impact of terminations on retirement plan deferrals – A mass termination of employees can have several impacts on your retirement plan and even trigger immediate vesting, depending upon the circumstances.
  • Considerations for employer and matching contributions – You may need to take action if your business suffers a drop in revenues – or no revenues – if your plan calls for matching contributions. This is especially important if there are Safe Harbor considerations.
  • Plan loans and hardship distributions – As workers face layoffs and uncertain employment futures, requests for loans and hardship withdrawals are spiking. There are regulatory considerations to consider based on your plan document as well as federal regulations. The pandemic has not been declared a disaster, a consideration for hardships.
  • Market volatility – The economic impacts of the pandemic have shaken the financial markets and significantly impacted many retirement plan accounts. It could be the worst time to make a withdrawal or loan so employers can help employees by asking them to think twice about the impacts of drawing on retirement savings. Having said that, some employees may have few other options if they need cash immediately.

The Coronavirus has had a sweeping effect on lives and businesses worldwide.  The best antidote is to continue working together to help each other make it through the end of the tunnel to daylight. Please don’t hesitate to reach out with any questions – or even suggestions – about how MassMutual can help during this unprecedented time of need.

MassMutual is here for you and your employees.

Una Morabito is Head of Client Management for Massachusetts Mutual Life Insurance Company (MassMutual®).