Administering Retirement Plans Through a Disaster

Journal of Pension Benefits Autumn 2020

Michelle Capezza, Member of the Firm in the Employee Benefits and Health Care & Life Sciences practices, in the firm’s New York office, authored an article in the Journal of Pension Benefits, titled “Administering Retirement Plans Through a Disaster.”

Following is an excerpt (see below to download the full version in PDF format):

The COVID-19 pandemic creeped into our lives in early 2020 and brought the entire world to a halt. As with any disaster, US employers had to act quickly to determine how to continue their businesses and manage their workforces. For employers that sponsor employee benefit plans, ensuring proper management of those plans added another layer of responsibility. As laws were enacted to address the economic fallout that ensued, many retirement plan sponsors and fiduciaries found themselves in the position of having to make decisions in short time frames in response to service provider deadlines regarding new plan distribution options under the Coronavirus Aid, Relief, and Economic Security Act (CARES Act). Many implementation decisions had to be made even before Department of Labor (DOL) and Internal Revenue Service (IRS) guidance was issued. As guidance was released, however, reference was made to interpretations and approaches set forth in previous guidelines issued for qualified Hurricane Katrina distributions under the Katrina Emergency Tax Relief Act of 2005 (KETRA). Notably, similar guidance was issued in connection with other disasters.

Despite the past pattern of disaster laws and related guidance, the absence of guidance at the time when quick decisions needed to be made by plan sponsors and administrators (often a retirement committee) caused debate as the CARES Act retirement provisions were reviewed on their face and interpretations of the provisions varied. In light of the similarity of rules and interpretations set forth in past disaster distribution guidance, it would be prudent for retirement plan administrators to prepare a disaster response administrative checklist (DRAC) to use as a guidepost for future decisionmaking and administration should another disaster impacting the workplace occur.