Tuesday, June 16, 2020

IRS permits remote notarization of participant elections

The economic and societal lockdowns that have been imposed in an attempt to slow the spread of the coronavirus have presented unique challenges, including some that may not have been contemplated when the lockdowns were instituted.

Congress was quick to pass the CARES Act, which gave retirement plan participants greater access to their plan balances through expanded loan and hardship distribution provisions. However, a stumbling block quickly became apparent when plan provisions required spousal consent for some distributions or loans.

Spousal consent waivers for plans subject to qualified joint and survivor annuity provisions of Section 417 of the Internal Revenue Code generally must be witnessed in the physical presence of a plan representative or a notary public. Similarly, the same spousal consent and witnessing requirements apply to designate a non-spouse beneficiary for a 401(k) or ERISA-covered 403(b) plan. Physical presence can be difficult to achieve in light of stay-at-home orders and temporary business closures.

Monday, June 15, 2020

The DOL expands rules on e-delivery of participant notices

As described in our previous article on participant notices, plan sponsors of qualified retirement plans must routinely provide various notices to participants and beneficiaries regarding plan provisions, investment information, fees and more.  On May 21, the U.S. Department of Labor released new regulations regarding the electronic disclosure of these notices, ushering in an era of convenience for a historically arduous requirement.

Electronic delivery rules have existed for years, but abiding by them has been prohibitive, particularly when delivering to employees not using a computer as an integral part of work duties. The new rules do not replace the existing ones, but instead offer a more feasible alternative to them.

Friday, May 15, 2020

Coronavirus-related distributions 100% taxable for New York state and local income tax purposes in 2020

The Coronavirus Aid, Relief and Economic Security (CARES) Act was signed into law on March 27. Under the Act, participants affected by the coronavirus may be able to take distributions in 2020 of up to $100,000 from an employer-sponsored retirement plan or an IRA. Although allowing these distributions from a qualified retirement plan is optional, we have seen that a number of employers have chosen to amend their plans to permit such distributions.

The Act provides that coronavirus-related distributions will not be subject to the mandatory 20% withholding nor the 10% early withdrawal penalty (for those younger than 59½) that would otherwise apply.

Tuesday, May 12, 2020

Invisible


Investors are understandably concerned about the drop in value of their holdings as the first pandemic in many generations redefined our lives, seemingly overnight. HBS believes that investment processes, grounded in understanding the financial markets and the economy, provide the antidote for impulsive investment decisions.

In The Wealth of Nations, a definitive examination of the practical and moral aspects of a market economy in the pre-industrial age, Scottish economist Adam Smith coined the term invisible hand as a guiding principle. Mr. Smith’s explanation of free-market economics in 18th century Great Britain centered on the belief that market participants always act in their own interest. A marketplace of sellers and buyers making voluntary transactions unleashes powerful economic forces — the invisible hand.

Monday, April 27, 2020

HBS participant education services: Timely help from a safe distance

The current pandemic environment proves how unpredictable this world can be throughout a person’s career and life. That’s why the value of HANYS Benefit Services’ participant education services cannot be overstated: Being there for our clients’ employees is of paramount importance and a key measure of our success. In addition to our plan level consulting services, we offer a dedicated team of highly trained and experienced educators to assist retirement plan participants. Our salaried team members educate employees, with no conflict of interest.

Thursday, April 16, 2020

In Fed We Trust

In March, the market’s “fear gauge,” the VIX, reached 82.7, the highest close in its 30-year history. Daily moves in the S&P 500 averaged +/-5.0% and its 12.0% decline on March 16 was the worst day for the index since Black Monday in 1987. The New York Stock Exchange on March 23 closed the physical trading floor for the first time in its history and moved fully to electronic trading.

As headlines focused on the equity markets, the volatility in the fixed income markets was unrivaled. As investors looked to raise cash, dealers, who typically act as shock absorbers for the bond market, were not able to match panicked sellers with willing buyers. A lack of liquidity occurred in the fixed income market and extreme price dislocations occurred.

Monday, April 13, 2020

Important considerations for retirement plan sponsors during the coronavirus pandemic

We are in unprecedented times and companies are facing a multitude of challenges in many aspects of business. Here at HANYS Benefit Services, we are committed to helping guide our clients through these times. Below are important considerations for retirement plan sponsors during the coronavirus pandemic.
  1. Eye on compliance. Remote work conditions have put distance between many collaborative human resources staff. It’s critical to keep a focus on key administrative tasks such as the timely funding of plan contributions and processing of participant requests. Keeping your retirement plan vendors apprised of any staff reductions and plan changes can help ensure smooth plan administration during this time.
  2. Working with a tighter budget

Wednesday, April 1, 2020

COVID-19: Retirement and Benefit Plan Resources

As the COVID-19 crisis continues to unfold, we are closely monitoring news and updates from top sources. We’ll be updating this section as new developments unfold. Here are several key articles and links to help plan sponsors and administrators navigate the COVID-19 impact to retirement and benefit plans:

Retirement Plans

4 key CARES Act provisions for retirement plan sponsors

On March 27, President Trump signed the Coronavirus Aid, Relief and Economic Security Act, legislation intended to provide relief to Americans amid the coronavirus pandemic. In addition to emergency provisions including financial stimulus payments to qualifying Americans, the Act provides certain relief within retirement plans to participants and plan sponsors. Specifically, the Act provides for the following:

  1. Coronavirus-related distributions. Before December 31, 2020, IRA holders and participants in defined contribution plans can withdraw up to $100,000 as a “coronavirus-related distribution.” To qualify, one must have been diagnosed with COVID-19, had a spouse or dependent diagnosed, or experienced adverse financial consequences due to virus-related work reduction. The law refers to such financial consequences as those resulting from being quarantined, furloughed or laid off or having work hours reduced due to such virus or disease, being unable to work due to lack of child care due to such virus or disease, closing or reducing hours of a business owned or operated by the individual due to such virus or disease, or other factors as determined by the Secretary of the Treasury. Participants can self-certify their eligibility. Administratively, the $100,000 limit applies across all plans of the employer or controlled group.

    Update: Among other important clarifications for plan sponsors and individuals, the IRS guidance released on June 19 expands the availability of coronavirus-related distributions and loan relief. Qualification now extends to those with reduced pay, a rescinded job offer, or a delayed start to a new job due to COVID-19. It also extends to those whose spouse or fellow household member has suffered certain financial effects from COVID-19, including impacts to a business owned or operated by that person.

Tuesday, March 3, 2020

Markets React to Coronavirus

We have the following observations about the impact of the novel coronavirus outbreak on markets. First identified in Wuhan, China, in December 2019, cases of COVID-19 continue to climb.

Though this coronavirus presents unique challenges, New York’s hospitals and health systems have extensive experience successfully managing outbreaks. In the past 20 years, they have been leaders in tackling the 2003 SARS outbreak, the 2009 influenza pandemic (“swine flu”), the 2014 Ebola outbreak and others.

The vast majority of cases have been in mainland China. However, with more confirmed cases being reported across the globe this week, concerns have become more widespread, particularly after the Centers for Disease Control and Prevention cautioned about the potential impact in the United States.


Thursday, February 20, 2020

FMLA Administration Outsourcing

The Family and Medical Leave Act (FMLA) is a federal law that allows eligible employees to take unpaid leave for a variety of personal circumstances. Due to the numerous regulations and complexities of the FMLA, administering FMLA leave can be a daunting task for many HR departments. In an effort to make FMLA administration more accurate and efficient, many employers have opted to outsource their leave programs to outside vendors.

Why Do Companies Outsource FMLA Administration? 


Wednesday, January 29, 2020

Q4 Market Recap: Roaring into the 20s

U.S. equities continued to roar leading into 2020. The Federal Reserve reversed course on monetary policy in 2019, stimulating both the economy and securities markets.

Read the Q4 Market Recap for a brief review of the 2019 stock market performance and outlook for 2020. Also included is an update on important provisions in the Setting Every Community Up for Retirement Enhancement (SECURE) Act.

If you have any questions, or would like to begin talking to a retirement plan advisor, please get in touch by email or by calling (800) 388-1963.

Wednesday, January 15, 2020

Fiduciary safe harbor for selection of lifetime income provider

The Setting Every Community Up for Retirement Enhancement (SECURE) Act provides a safe harbor for plan fiduciaries who select a guaranteed retirement income contract, which is defined as an annuity contract for a fixed term or providing for systematic payments guaranteed by the provider to be made over the life, life expectancy or joint lives or life expectancies of a participant and beneficiary.

Retirement plan fiduciaries will be deemed to have acted prudently and will be eligible for the new safe harbor protection if they engage in and document the following process:
  • objective, thorough and analytical search for an annuity provider;
  • consideration of all costs, benefit features and terms of the contract;
  • obtain written assurances from the provider of compliance with all federal and state laws and regulations governing lifetime income solutions, including state insurance laws;
  • as a result of the analysis, the plan fiduciaries should be able to conclude that the provider has the financial strength to fulfill all its obligations under the contract; and
  • the cost of the contract is reasonable (the SECURE Act does not require that fiduciaries select the lowest cost provider).
Annuities may not be appropriate for all plans, but interested plan fiduciaries now have a safe harbor if they wish to consider including them.

If you have any questions, or would like to begin talking to a retirement plan advisor, please get in touch by email or by calling (800) 388-1963.

Don't Get Caught in the Act:

The Setting Every Community Up for Retirement Enhancement (SECURE) Act

After spending most of 2019 on hold in Congress, the SECURE Act was passed and signed into law on December 20. This is the largest retirement reform act since the Pension Protection Act in 2006 and has a broad focus on improving both the reach and quality of retirement plans, as well as updating several individual tax rules.

While most changes require no immediate action, it’s important for plan sponsors to be aware of changes that may soon impact them. Here is a chart with the most significant changes:

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