Some businesses have been forced to temporarily, or in some cases, permanently, suspend their operations, or require that their employees work from home, as just some of the consequences of Covid-19. The current situation is naturally worrying for employers but is also causing great concern for employees who have important questions related to their retirement, and how the global pandemic may have an impact upon it.
What can you, as an employer, do to help ease your employee’s concerns?
There are several things that as an employer, you can do to help your employees, and two of the most important are listed below. For a more detailed guide to retirement post (or during) Covid-19, seek help from your existing retirement plan provider, who can better guide you as to your legal responsibilities and options.
- Allow your employees easier access to their retirement savings
Employers are now able to amend their retirement plans under the CARES Act, to give greater access to retirement savings that can be used for other purposes. To know more about the provisions under the CARES Act, reach out to your service provider.
- Hardship distributions related to Covid-19
If plans are amended to provide for this, under the CARES Act, defined contribution retirement plans can make distributions related to Covid-19 of up to $100,000, to those participants who qualify. Otherwise known as CRD’s, these distributions are not subject to the early withdrawal penalty tax of 10% but are subject to normal income taxes. These distributions can be paid back within 3 years of their issue date, along with any federal income taxes on the amounts not paid back into the plan.
How employers can help themselves, and their employees:
Having created numerous challenges for employees already, Covid-19 and the ensuing economic crisis is not yet set to dissipate, but employers can provide their workers with valuable assistance and relief. One of the primary ways in which they can do this, is by informing employees of the resources available to them through employee benefit plans and other employer-sponsored programs.
In these difficult times, many employees will undoubtedly want to review their financial strategies, and assess what changes, if any, they can make according to their personal situations. As an employer, you’ll want to think carefully about what help you can give them and talk to your retirement plan service provider to confirm any changes, or to seek further guidance.
Conclusion
While retirement plans for your employees may not be at the top of your list of current priorities, there is every reason that it should be. Your employees are valuable to your company and helping to allay their financial fears while giving them as much assistance as you can with respect to their retirement plans, makes sense for both parties. To know more about the options available to you with respect to your employee retirement plans, reach out to your service provider today.