The $900 billion coronavirus relief package, which is expected to be approved by President Trump in the coming days, includes some good news for retirement plan sponsors. The massive 5,600-page bill includes a “temporary rule preventing partial plan terminations” for plan sponsors of defined contribution retirement plans. The provision specifically states, “A plan shall not be treated as having a partial termination (within the meaning of 4119(d)(3) of the Internal Revenue Code of 1986) during any plan year which includes the period beginning on March 13, 2020 and ending on March 31, 2021, if the number of active participants covered by the plan on March 31, 2021 is at least 80 percent of the number of active participants covered by the plan on March 13, 2020.”
This provision allows defined contribution retirement plan sponsors to avoid requirements that are attached to partial plan termination rules, the biggest of which includes terminated participants to become 100% vested in plan benefits. Plan sponsors that previously concluded they may trigger partial plan termination due to layoffs, furloughs or terminations of employment should evaluate participant counts to determine whether their active participant count as of March 31, 2021 is 80% of the active participant count on March 13, 2020.
You’ve heard our thoughts… We’d like to hear yours
The Schneider Downs Our Thoughts On blog exists to create a dialogue on issues that are important to organizations and individuals. While we enjoy sharing our ideas and insights, we’re especially interested in what you may have to say. If you have a question or a comment about this article – or any article from the Our Thoughts On blog – we hope you’ll share it with us. After all, a dialogue is an exchange of ideas, and we’d like to hear from you. Email us at [email protected].
Material discussed is meant for informational purposes only, and it is not to be construed as investment, tax, or legal advice. Please note that individual situations can vary. Therefore, this information should be relied upon when coordinated with individual professional advice.
Learn more about how private colleges and universities tackled the Coronavirus pandemic and maintained consistent operating cash flow margins consistent with years prior and how federal aid to many colleges and universities helped boost performance amid the decline in fiscal 2020 operating revenues. ...