Businesses large and small are hustling to continue operations, manage cash flow and avoid layoffs and terminations if possible. We’ve been through this before and we’re ready to share our employee benefits experience from past economic disruptions.
We’re available to provide guidance about your employee benefits as you plan for an uncertain future. Here are some things you should think now about as you formulate your business plans.
- You may be able to suspend or reduce employer contributions to retirement plans. If you have a safe harbor 401(k) Plan, you must give advance notice to your employees. Other types of pension plans may require advance notice to cease or reduce benefit accruals. In other cases, you may have discretion to reduce employer contributions and the key will be how to properly implement changes and communicate to your workforce.
- Through pending legislation, expanded hardship withdrawals and loans may be available to help your employees through this mess. You may want to provide specific information to your employees, and plan amendments may be needed to provide additional loan and distribution options.
- If you are forced to furlough or lay off employees, full vesting in retirement benefits may be required, depending on the number of affected employees, and employees who lose health coverage may be entitled to continuation coverage under State or Federal law.
- Are you providing adequate access to investment education to address stock market volatility and ease employees’ fears?
- Are you making changes to plan investment options and do you have a blackout period scheduled?
- If you reduce hours, does your health insurance policy allow continued coverage for employees who are no longer full-time? Will your company continue health insurance benefits for employees who lose eligibility or will you offer COBRA continuation coverage (or Cal-COBRA)?
- If you have union employees, will a layoff or reduction in force result in withdrawal liability?
We’ve learned a few things in our collective years of experience.
- First, don’t panic. Make a good plan and revise as necessary.
- Second, keep paying health insurance contributions and depositing your employees’ 401(k) deferrals. Using those funds for cash flow until you can catch up hardly ever turns out well.
- Third, get the help you need from experienced advisers.
Finally, talk to other business owners. We’re all in the same boat now. Others may have good ideas to keep your business going until we get through this crisis.