The Coronavirus Aid, Relief, and Economic Security (CARES) Act has many provisions that will affect both defined benefit plans and defined contribution plans. In this episode of Critical Point, Milliman’s Charles Clark and Ginny Boggs talk about the CARES Act and its implications for retirement plans.
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There are certain circumstances that can result in a company terminating its 401(k) plan. Milliman’s Ginny Boggs was quoted in a recent Employee Benefit Adviser article discussing the steps involved with a 401(k) plan termination during the American Society of Pension Professionals & Actuaries (ASPPA) annual conference.
Here’s an excerpt from the article:
Until all assets within the plan are finally distributed the plan still remains in effect and cannot be terminated. During this time, Boggs recommends that advisers work with their clients on:
• Distribution requests due to many participants wanting their money immediately and to assist with loan repayments
• Governmental forms and filings
Advisers should remind their clients to use up their forfeiture accounts through expenses, allocating to participants or offsetting final contributions
“You can’t have any unallocated assets going into plan termination and you do have to liquidate,” Boggs said. “You want to make sure the plan termination amendment encompasses everything that the plan document doesn’t already provide.”