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COVID-19: Provider and Investment Questions

Published by Kim Moore on Mar 31, 2020 6:00:00 AM

We are all concerned with the impact the pandemic is having on our businesses, employees and the overall economy.  We spoke in previous blogs of items to consider as a Plan Sponsor in this critical time and also of Congressional actions that will impact your Plan. Please click on the links above to review previous blogs.

Some additional items that should be considered if you are a Plan Sponsor of a 401(k) Plan during this time are:

  • What is the financial stability of the asset holder for your Plan? All businesses are working to adapt in these 401k cornoviruse pindemic brad_open_roller_banner_22318ever-changing times but as one of the fiduciaries for the Plan, it is a good idea to check on the health of the entity that holds the Plan investments.  If your investments are in mutual funds or pooled separate accounts, most likely there will be no issues as these funds are held separately from any company accounts. 
  • However, if your Plan has contract value investments such as those held by insurance companies in their general account, these are subject to the financial stability of the insurer.  Although Susan Neely, the CEO of the American Council of Life Insurers recently stated that insurers are solid, it would be a good idea to check with your specific carrier. 

  • What provisions has your service provider, especially your record-keeper, made to ensure they can still provide the needed service to your Plan in the event the office must be closed? Do they have the ability for their representatives to work from home?  Do those representatives have access to Plan information needed to service your Plan?  We recommend you check with your Plan provider to ensure they will remain available to serve the Plan and participants throughout the pandemic.  As of the date of this blog, no significant regulatory filing dates have changed.  (Please note date extensions are expected in the future.)  Verify your provider is on-track to ensure you can make the filings needed in the case extensions are not available to avoid future penalties.

  • We also recommend you check with your service provider regarding the legislation working through Congress currently. Verify your provider will be able to make changes needed if you want to take advantage of some of the new provisions.

  • Lastly, as we have all seen the stock market has gone through significant volatility over the past few weeks. Investment losses are unavoidable.  However, it is your responsibility as the Plan Sponsor and Plan Administrator to ensure the investment lineup is solid and diversified.  Now would be a good time to reach out to your Investment Advisor to ensure you document a regular review of the investments offered and make replacements as warranted.  A few minutes in the discussion along with documentation of the review can help avoid problems later if a participant challenges the investment performance and selection.

We know these are challenging times for everyone.  At Summit CPA Group, we provide quality 401(k) audit services and as part of that, we review updates to regulations that impact these plans.  We’re here to answer your questions and provide additional updates during your audit process. For assistance contact us at 260-918-8824

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