The CARES Act and the Value of a 3(16) Fiduciary
3(16) fiduciaries can provide added value to plan sponsors right now—with CARES Act insights and expertise to help guide sponsors through this challenging time. Removing fiduciary risk and eliminating retirement plan burdens is possible. The value of a 3(16) is more important during challenging times as a result of increased fines and fees. Work with a professional to handle the details for you. CARES Act Provisions Impacting 401(k) Plans • Waives the 10% early distribution penalty on coronavirus-related distributions of up to $100,000. • Increases plan loan limits to $100,000 or 100% of a participant’s vested account balance for coronavirus-related loans and extends repayment periods up to one year for both new and existing loans. • Allows COVID-19 affected individuals to self-certify. • Distribution and loan provisions are optional and may be used immediately as long as a plan amendment is adopted before the end of the 2022 plan year. • Temporarily waives Required Minimum Distributions (RMDs) for calendar year 2020, allowing individuals to keep funds in their retirement plans.
What Makes a 3(16) Fiduciary so important when it comes to the CARES Act?
What Makes a 3(16) Fiduciary so important when it comes to the CARES Act?
A 3(16) fiduciary leaves interpreting legislative details to a professional. With all of the retirement plan changes that the CARES Act brings, a 3(16) fiduciary can help ensure that your plan is being administered in compliance with the new rules and taking advantage of features that can help your participants get through this difficult time. A 3(16) fiduciary can help ensure that all required notices are distributed. Not distributing required notices is a common source of plan errors, fines and penalties. Getting required notices to employees is more challenging now with so many people working offsite (or not at all). A 3(16) fiduciary can help ensure that all required plan notices are distributed on time and on schedule, whether they are sent electronically or by mail. A 3(16) Fiduciary can help administer CARES Act coronavirus-related distributions. As a result of the continued impact of the coronavirus pandemic, people may look to their retirement accounts to help ease potential financial burdens. The CARES Act allows plans to make coronavirus-related distributions to eligible participants. A 3(16) fiduciary can handle the details for you, including approving distribution eligibility. A 3(16) Fiduciary can help manage CARES Act expanded loan opportunities. The CARES Act allows participants to take coronavirus-related loans and extends repayment periods for up to one year for both new and existing loans. A 3(16) fiduciary can handle the details for you, including approving loan eligibility. A 3(16) Fiduciary can help navigate Required Minimum Distributions Rules under the CARES Act. The CARES Act temporarily waives Required Minimum Distributions (RMDs) for calendar year 2020. A 3(16) fiduciary can manage these details for you, including determining who is eligible, and providing them with notice of these changes. When you can trust someone to do their best work, you can focus on doing yours. Making things easier is one of our overarching goals. Risk management is another. Even one mistake in operating your plan could cost you thousands of dollars or open you up to a lawsuit. As a fiduciary you are personally liable for plan errors. We can help you take this work off your plate so that you can focus on managing your business during this challenging time. Read our FAQ on the CARES Act. Visit our COVID-19 Resource Page.
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