Revisiting Retirement Plan Designs After the Global Pandemic

Confero Magazine Spring 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 Confero Magazine, titled “Revisiting Retirement Plan Designs After the Global Pandemic.”

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

When the year 2020 began, there was much optimism in the business world. Employers set many goals and established initiatives geared toward investing in their human capital in order to best assist their employees to grow and contribute to the performance of the organization. The passage of The Setting Every Community Up for Retirement Enhancement Act of 2019 (the “SECURE Act”), signed into law on December 20, 2019, also included provisions to expand  access to tax-advantaged retirement accounts and secure retirement streams of income. Many plan sponsors were eager to digest and implement the new requirements of the SECURE Act as well as communicate these changes to participants  As a result of the outbreak of the global COVID-19 pandemic, the world has undeniably changed in a short time, and many businesses and workers are struggling. Many have endured severe financial harm and significant loss to their retirement savings.

As we move through the pandemic crisis, there is hope that we will eventually be able to resume our normal lives and create better organizations and systems. Financial stressors will remain with all of us for some time, and employers will seek ways to alleviate these stressors for their human capital.  Undoubtedly, discussions will also renew regarding ways to protect retirement assets against volatility in order to better secure the prospect of a secure retirement with predictable lifetime income. With the SECURE Act, employers who sponsor defined contribution retirement plans, such as 401(k) plans, now have: (1) new participant disclosure obligations; (2) the ability to adopt certain portability design features related to lifetime income investment options; and (3) guidelines to encourage inclusion of lifetime income investment options in plan investment line-ups. Plan sponsors and fiduciaries should become familiar with the mandatory requirements as well as the optional aspects of these rules and determine how to leverage them to ease employee retirement concerns.