By Jennifer Tavella
Trinity Point Wealth
As business owners make decisions to navigate the coronavirus epidemic, they should bear in mind how those decisions can affect their retirement plan and plan participants. Aside from general concerns regarding the economy and the stock market, business owners should also be aware of other plan-related issues, including:
Participant anxiety – Business owners should address participant concerns about market volatility, the benefits of long-term investing and dollar cost averaging, and plan features. This can be done through planned webinars, distribution of relevant educational materials or direct contact with the plan advisor. The goal should be to mitigate participant concerns and to keep them focused on long-term savings needs.
Workforce reductions – In the event any employee layoffs or furloughs occur or are planned, employers should address the current and future status of participants. Relevant issues such as vesting, payment or suspension of loans, accessing retirement assets and taxable distributions should be considered.
Employer contributions – Any discussion of or intention to modify employer contributions should be done in the context of the current plan design (safe harbor 401(k), simple IRA) or if it entails a cash balance or defined benefit plan. Changes to employer contributions can have a potentially adverse effect on compliance testing and the ability of owners/highly compensated employees to contribute to the plan.
Trinity Point Wealth is located at 612 Wheelers Farms Rd. in Milford. The office can be reached at 203-693-8512.