Reviewing Qualified Employee Retirement Plans Post Covid-19 Part One
In the light of financial hardships many employees and businesses are suffering from due to the current heath crisis, employers might want to spend some time reviewing their qualified retirement plans and consulting with advisors to see if there any available provisions they can take advantage of. Here are some provisions that may be applicable to those employers with qualified employee retirement plans 401(k), defined benefit pension plans and other qualified retirement plans: Employer contributions may be eliminated or reduced: Employers may be entitled to forego discretionary employer contributions in any given tax year, without having to make any amendments to plans.
If they so wish, employers can amend plans to get rid of matching or employer contributions that the document requires. For defined benefit plans under section 412©(2), a temporary waiver of funding deficiency: If, as an employer, you’re unable to make a minimally required payment to a defined benefit plan for a tax year on time, and can prove that this is due to a ‘business hardship’ under section 412(c ), then there is the possibility that the IRS may waiver the funding deficiency on a temporary basis.
No requirement for an audited financial statement with a reduced workforce: If you’re sponsoring a defined contribution plan or a defined benefit plan, and your workforce has dropped to mean that there are less than 100 participants, then you may not be required to obtain and attach an audited financial statement for that year to your Form 5500, or any years in which employee numbers fell due to job eliminations and/or layoffs.
Eligibility for compensation through the FFCRA or FMLA: If your organisation employs less than 500 workers, you should look closely at your benefit plans to see whether the Families First Coronavirus Response Act paid leave provisions for paid sick leave, or enhanced Family Medical Act, should be left in or out of the plans’ definition of eligible compensation. Tax return due dates extended: Tax return deadlines of the 15th April 2020, have been extended to the 15th July 2020 for 2019 plan contributions under section 404 (a)(6).
The freezing of benefits accruals: Employers are usually given until the last day of the month to make any formal discretionary amendments, such as redefining hardship withdrawal provisions but some other amendments, including freezing benefit accruals in a defined benefit plan, will need employers to take on the amendments before the freeze date, and with advance notice given to those participants. Financial assistance for employees: As an employer, you should be talking to your employees about their personal circumstances, and whether anything has changed that might impact upon the likelihood of them having enough time to rebuild their account balances.
For more detailed advice and guidance about qualified retirement plans for employees, post Covid-19, reach out to a payroll or pension professional, who can give you all the latest news and updates, and help you assess your situation. Apollo Payroll is one of the premier small business payroll services companies in Miami and Coral Gables. Apollo Payroll is dedicated to delivering expert advice, responsive service, and highly accurate payroll processing and reporting to ensure the success and growth of the business that we serve. Our services include comprehensive payroll services in Homestead and other cities in Miami-Dade County, employee background check and group health insurance in Miami & Coral Gables