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What Concerns Plan Sponsors & HR About the Corona Virus

There has been a lot of changes due to the corona virus but that does not exempt you to fulfill your fiduciary duty as a plan sponsor.

The corona virus (COVID-19) has created some challenges to the economy and the stock market.  This article is about how you can help your employees cope with what is happening to their retirement plans.

The market has been in a continuous roller coaster and by now a lot of investors (including your employees) are concern that they are going to lose their life savings.   The current situation has been unpredictable and unexpected to many and we are still waiting to see what the total damage will be at the end.

So what can you do to help your employees cope with the current market condition?

COMMUNICATE

The reason why most relationships do not work is because lack of communication whether is spousal, friendly or employer to employee.

In the current market scenario, most of your employees need to be informed and communicated that times like this happen. Let your employees know about past market historic events and basic concepts like how dollar cost average investing works.

Make sure that you schedule an education meeting where a financial professional can explain everything that is currently going on and re-enforce the reason of why we safe for the long term.  

LET THE ADVISOR GIVE ADVICE

Provide your employees with the means to speak with some one in a personal basis that is willing to help and explain what is going on.

You should not try to give advice and do not forget that there is usually a third party that can do the advising instead.

Let your advisor handle the panic calls, do not panic yourself, and remember that this will happen again so who better than your advisor to handle the communication with your employees.

THINK LONG TERM

Most employees are saving for their retirement and in most cases, it will be a few years ahead. By then the market conditions could be completely different so why panic today.

What about those that are close to retirement?  Getting to retirement does not mean that you take their savings and hide the cash under the mattress.   Have them consult with a Financial Planner that can asses their current situation and show what options they have available.

BE PROCATIVE AND ANSWER THE TOUGH QUESTIONS

  1. Is the government changing any of the rules to the 401k plan distributions? Yes, the passed the C.A.R.E.S. Act: https://www.forbes.com/sites/leonlabrecque/2020/03/29/the-cares-act-has-passed-here-are-the-highlights/#33f55ff868cd
  2. Can I change my contributions? Yes
  3. Can I change my investments? Yes
  4. Is the Corona Virus qualify for a hardship?  Yes, but there are rules explained on the C.A.R.E.S. Act
  5. Can I take loans or change my loan payments? Depends on the plan, but in some situations yes.  

The answers can be very specific to your plan and if you are not sure then you can contact your TPA (third party administrator) that can help you with these questions.

The corona virus will not waive your responsibilities as a plan fiduciary so be proactive and use the existing tools that you have to calm the anxiety that your employees may have.

If you need help with employee communication or education, we are here to help.

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