The CARES Act permits a “coronavirus-related distribution” of up to $100,000, with favorable tax treatment, but employers across the country have struggled with this. Some implemented it; some are dead set against it, and some are taking a wait and-see approach.
Retirement plans experienced a monumental shift from the days of the company taking care of it’s employees' retirement needs, both in the accumulation phase and distributions in retirement, to current day where many plans are self directed and require the plan participant to make investment and withdrawal decisions on their own.
Most business owners offering 401k plans are not aware that they could be held personally liable for decisions made in their 401(k) plan, and the bigger your plan, typically the more likely that the IRS, DOL or a plaintiff’s attorney will take a look.
At first glance it would appear that all target date funds with the same retirement year would function exactly like each other, but the reality is that the funds from different companies could have significantly different equity exposures.
From fee compression to increased litigation to more educated plan participants, the days of “set it and forget it” for 401k plans are over. The generally held legal interpretation is that a plan sponsor / business owner need to to benchmark their retirement plan every 3 years to stay compliant.
Non Qualified Deferred Comp is a way to offer additional benefits to incentivize your key employees to stay loyal to the company, while providing some element of control for the provider of the plan.