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READER POLL: The Impact of Coronavirus (continued)

Here are some more reader comments:

Clients are concerned about their near-future business prospects. This is the time of year to make 2019 discretionary contributions, and they are holding off to see what happens. I think we will see many employers needing that money to meet payroll and other critical cash flow needs.

So far exploratory but some are likely to cut match. With potentially very large layoff we also are looking at triggering partial terminations.

They may need to layoff or furlough employees due to business closure, the PS or SH contributions, or DB contributions can add to their financial burden. By not requiring contributions this can help a business stay afloat.

Not just small plans, corporate clients as well. Clients exploring are low margin businesses or those who have high degree of leverage in their business model. Only plans that were at risk for termination prior to COVID-19, this could put them over the edge.

Most are wanting to know if they can suspend the match. Not stop all contributions. Two clients have discretionary matches so it’s not a problem for them, but one client has a safe harbor match and considering amending the plan to terminate the safe harbor portion (3% non elective).

Looking for ways to eliminate the match temporarily without plan amendment and still be SH.

Safe harbor plans wanting to stop contributions, will probably do mid-year amendment and change to discretionary match.

We’ve had one client freeze their match, but that’s it so far.

More industry specific, particularly hospitality and restaurant either looking to suspend employer contributions, or even explore the idea of terminating plan.

Tempting as it may be—this would put the plan participants at a disadvantage. I would not want my plans to suspend for a year—maybe for three months. These are the best prices some participants will ever get in their retirement accounts, with the most potential to grow. I wouldn’t want to have to defend a client’s action on this unless it truly was a decision of contribution suspension or making payroll.

I have had 10% of my clients (smaller companies) contemplate the future of their business. The retirement plan is an afterthought.

Logical to consider modification of Safe Harbor elections. Allow any election of Matching contributions to be considered: Discretionary with a 30 day notification requirement for modification! Further ease hardship parameters.

Clients in hospitality sector have been hit the hardest.

Largely focused on ceasing contributions, not terminating the Plan.

We have had a few clients suspend their discretionary employer match already. Some with safe harbor match, have asked about impacts of suspending their match.

One suspended the SH match; another is contemplating it; none asked about termination.

Not knowing how long it will last they are looking for retirement plan relief, especially those with Safe Harbor plans.

Looking to stop their match contributions until the crisis is over.

Mainly about stopping the discretionary ER contributions and/or stopping their S/H contribution.

So far just 4 out of about 120 or so have inquired, but like coronavirus cases I expect this number to jump exponentially.

A few, but not many—more interested in suspending match.

Generally asking about stopping contributions. Last one was SH match that they can no longer continue.

Just 1 wanted to know about discontinuing the employer matching contribution. We had the document amended.

Over 15 firms reached out after we reached out to them about options. Many in the medical practice fields are desperate as those doing elective surgery being forced to cease will see 50% revenue reductions in their business, if not closure.

Looking to suspend or reduce the match. Not terminate the plan, so far.

Have already had sponsors suspend company match.

Clearly impacts the participants (and whether or not many of them defer) but also obviously impacts plan flows and indirectly, our compensation and ability to service these plans at the same or improved levels.

None have been about plan termination: all relate to understanding their options for discontinuing employer-paid contributions.

Concerns about loss of income within family and inquiries on hardships and loan repayments are coming up now. I suspect we will have concerns to come from employers with a safe harbor match and wanting options.

Asked if they can suspend match and how to deal with furloughs.

Also, CalSavers for California employers is a concern. Our firm reached out to California to ask them to delay the required implementation to June 2021.

Many clients are still evaluating and waiting to see what Congress is going to do. Some are asking about participant loan details. Since most of this occurred after 12/31, they are still making profit sharing contributions but this will affect 2020 planning.

Two clients have suspended the safe harbor match for the rest of the year. They would like to do this instead of laying people off.

Concerned about ability to fund contributions and payment of fees.

55+ corporate plans Only 1 so far said they are doing a 95% layoff.

One canceled a new plan that was sold two months ago.

Most of them have revolved around suspending safe harbor requirements for the plan year.

Cash flow does not permit ongoing contributions.

Not confident that they will have the funding for the employer contribution component(s) of the plan.

Concerns right now are about participants on furlough who can't take a loan.

Company contributions—can they suspend them—it’s not just small businesses.

No funds available due to business shutdown.

Can they change plan document to allow for in-service withdrawals? For those that previously had no loan, they have asked about adding loans. they need liquidity any way they can get it.

YES—they're asking the ins and outs of suspending or changing the safe harbor contributions. Even if they're not pulling the trigger YET, they're asking to get ahead of the curve, just in case. This expands small organizations with less than $1M in revenue all the way to medium-sized publicly traded organizations with revenues in excess of $5B.

Not funding anymore due to business environment. Too small of a plan in this particular case.

Stop contributions including SH plans. Terminate plans altogether.

Many looking to suspend safe harbor contributions due to extreme financial hardship. Need testing considerations if this is done since many of the small business plans would be top heavy.

These concerns don’t seem to be confined to any one type of industry.

Clients asking to: suspend matching contributions suspend safe harbor contributions put hold on employee deferrals and safe harbor.

They were wanting to stop contributions until the market settled down.

I believe it is a function of what happens and how long this situation lasts.

They need access to monies to fund their offices.

Most are wanting to know if they can decrease or stop their contribution.

The safe harbor contributions need to be addressed also. The temporary suspension without ramifications needs to be addressed.

We anticipate such inquiries/changes, but haven't heard from clients directly, yet.

Concerns about funding ER contributions—especially Safe Harbor.

Temporarily halting the deposit of safe harbor contributions with each payroll period.

They want to know options about suspending the safe harbor match.

We’ve discussed ceasing the ER contribution, postponing the funding (annually vs quarterly or each payroll).

Plans are stopping matching and safe harbor contributions.

Several—want to stop/suspend safe harbor match contributions; thinking about terminating their plan(although i asked them to wait until a bit later in the year since we would still have time and let’s see what happens); wonder if employees can take hardships since they have to temporarily furlough them.

At this point I would be surprised if any DC clients terminated their retirement plans. However quite a few may take advantage of suspending ER contributions if allowed under the CARES Act.

A few of our small business clients have inquired about suspending their employer contributions, including safe harbor contributions. None has yet to mention plan termination.

I’m not sure many have thought about their retirement plan yet, so at this point in time only a few have requested a plan termination. More are concerned about loan payments and participants wanting to take withdrawals.

Two not for profit clients.... one asked about how putting employees “on furlough” would impact their pension contribution (it’s a money purchase plan)—answer... they would not get their contribution. The other not for profit was not about suspending the contribution but rather, pushing its funding a few months down the road. I assume there are cash flow concerns.

Small dentist in Maryland is terminating his workforce so they can collect unemployment. Dentist has a Cash Balance Plan and a Profit-Sharing Plan. Meeting the minimum funding in both plans will be close to impossible if business doesn’t start up again, and by terminating all of his participants, he’s created a partial plan termination, all ees go to 100% vesting and they’ll all be able to take their benefits out. What a mess. Not to mention what a hit the assets have taken, and how that will affect funding.

It is not just small clients looking at suspending contributions. Some larger clients are contributing $1m a month

Employers are looking into stopping their Safe Harbor contributions for the year. They are also looking into terminating employees so they are able to collect unemployment.

Asking about ability to delay funding of 2019 contributions and possibly suspending 2020 safe harbor contributions.

Suspending fixed match or non-elective, especially safe harbor contributions. Placing employees on temporary leave; can they consider this Leave of Absence and not Termination?

Many are asking to suspend their matching contributions

Only one out of 55 clients has asked about suspending safe harbor match contributions. None have asked about plan termination.

Most are wanting to halt match and/or non-elective... particularly safe harbor.

They wanted to stop their match (which is discretionary so no problem there). I’m concerned about substantial layoffs at several clients.

Business fearing things will take a long time to recover and need to protect jobs as much as possible. Safe Harbor contributions for last year a very big concern for my all my clients.

As of now, all my clients are keeping the match.

Need help with safe harbor plans to delay.

Simple employer contributions mid year stop? Safe harbor non elective and match, can that be adjusted? What about auto enrolled people that thought a match was coming?

They are considering terminating participants so they can get cash. They are considering terminating plan and/or stopping all company contributions.

So far the client concerns have been low and we have not had a rush to make changes to their Plan Documents. It would be great to see other timeframe of National distress that caused Plans to take action. Those state may give some insight to what we may see in the near future.

Some are having furloughs or layoffs. Some need their employees but can’t afford the match. Some are considering stopping employer non match contributions.

Several have inquired about stopping or reducing ER contributions temporarily.

Mainly concerns about funding employer required safe harbor contributions. Needing to make amendments to avoid that and the cost of the amendment.

What do they have to do, what do they have choices about and the timing of these important decisions as they are looking for ways to cut expenses.

They are reducing all unnecessary business expenses, including retirement plan benefits.

Most of the concerns surround adapting from working from home, managing orders/supply chains, and managing employee concerns regarding home life/work life balance.

Their clients are canceling business/revenue. Employees are being laid off & they want to be able to give them distributions or loans. They are concerned about being able to make the company contributions they've promised to the plan, such as Safe Harbor.

Cash flow is severely impacted and relief from matching contributions is sought.

Businesses that are unable to operate at full capacity (mainly restaurants) are the most frequent communication regarding concerns.

Most focused on messaging to participants to stay the course and provide our team as a resource and recordkeeper resources.

Trump will allow targeted returns to work within the next 10 days. Fed is providing liquidity. Congress will eventually(get rid of Pelosi/Schumer interference)pass legislation for economic stimulus.

The ability to meet the financial obligation as a safe harbor plan to fund the match or NEC. Due to uncertainty, they are taking drastic measures like amending their plan to mitigate any downside.

They do not have the cash reserve to sustain their business for several weeks or more. They area already laying people off. They are concerned about required contributions when they do not have the money. Employees are in a panic and looking to money.

Legitimate concerns. The employer has the same concerns about his own family, now caring for his kids at home while home schooling, and feels the weight of his employees’ same fears about caring for family. Trying to remain a viable biz on the other side of this thing.

I have spoken with pretty much all of them... most are hunkering down, bracing for full impact... we are so new into this (kinda suckerpunched us). Many have been trying to navigate how they can keep their people on, bring in revenue and keep the lights on. It’s a tough environment for the services industries.

Amending plans to remove safe harbor contribution. Evaluating layoffs, removing match.

Main concerns around stopping employer contributions, and delaying testing as they are dealing with business continuity concerns.

A few of our clients have asked us about what their options were if there is a sustained shutdown. We discussed suspending matching contributions, passing along fees to participant assets, etc.

They are concerned their customers aren’t going to pay or pay late for their services and/or goods. Also concerned about The cost of paying employees who have to stay home with children who have their schools closed.

Everyone silent, no one wanting to decide anything. Too much uncertainty with no end date in sight.

Can’t fund last year’s contribution / safe harbor. Suspending current year’s safe harbor. Many are contemplating bankruptcy.

Their business is gone and won’t come back. Massive flood of distributions expected. Flow into plans dramatically reduced. Loss of faith in funding of private pension system.

The uncertainty of the length of this crisis and wanting to take proactive approach to conserving as much money as possible just in case they need it.

Need to plan for cash flow, hold onto staff. Need to cut costs.

Not being able to fund the employer match or wanting to suspend so that they can use that money to keep the doors open.

A major concern for pension clients is upcoming required contributions.

Our clients have expressed no concerns.

As mentioned above—mostly concerned about how to cut costs to save jobs. Eliminating the safe harbor contribution for one client means about 14 jobs.

Most are wondering if they can stop making matching contributions. Others are wondering what to do about loan payments when they have laid off employees who have loans?

With the exception of large employers and certain smaller employers (bike shops, pharmacies, etc.), this is hitting everyone and hard.

Receiving questions from a small minority about suspending the match, though that will likely increase going forward until the curve has flattened.

Some of our clients would rather cease contributing to the Plan in lieu of layoffs.

Thanks to everyone who participated in our weekly NAPA-Net Reader Poll!