Speaking during a webinar on Monday, Will Hansen, chief government affairs officer with the American Retirement Association (ARA) and executive director of the Plan Sponsor Council of America (PSCA), told viewers that over 200,000 small defined contribution plans could be in danger of termination due to the COVID-19 crisis.
In response to the looming small defined contribution plan possibility, the ARA has requested the Department of the Treasury to make regulatory changes that would allow sponsors of safe harbor retirement plans to reduce or suspend employer contributions immediately without giving participants 30 days' notice as required under current rules.
If the organization is unable to sway the Department of the Treasury to make changes to the regulations, many small businesses may have no other choice but to terminate their plans due to cash flow issues.
The ARA also asked the Department of the Treasury to relax a current regulation that causes a partial plan termination if a sponsor lays off over 20 percent of its workforce.
With that, the ARA also intends to lobby Congress for relief and will ask lawmakers to allow plan sponsors with fewer than 500 participants to waive any 2019 obligations that have yet to be met.
