The Coronavirus Aid, Relief and Economic Security (CARES) Act was signed into law on March 27. Under the Act, participants affected by the coronavirus may be able to take distributions in 2020 of up to $100,000 from an employer-sponsored retirement plan or an IRA. Although allowing these distributions from a qualified retirement plan is optional, we have seen that a number of employers have chosen to amend their plans to permit such distributions. The Act provides that coronavirus-related distributions will not be subject to the mandatory 20% withholding nor the 10% early withdrawal penalty (for those younger than 59½) that would otherwise apply. In addition, participants have the option to return some or all of the funds to the plan or IRA if done so within three years, thus avoiding taxation on these amounts. To the extent funds are not redeposited within the three-year period, such amounts will be subject to ordinary income tax. The income tax due on the distribution will be spread ...

The Coronavirus Aid, Relief and Economic Security (CARES) Act was signed into law on March 27. Under the Act, participants affected by the coronavirus may be able to take distributions in 2020 of up to $100,000 from an employer-sponsored retirement plan or an IRA. Although allowing these distributions from a qualified retirement plan is optional, we have seen that a number of employers have chosen to amend their plans to permit such distributions. The Act provides that coronavirus-related distributions will not be subject to the mandatory 20% withholding nor the 10% early withdrawal penalty (for those younger than 59½) that would otherwise apply. In addition, participants have the option to return some or all of the funds to the plan or IRA if done so within three years, thus avoiding taxation on these amounts. To the extent funds are not redeposited within the three-year period, such amounts will be subject to ordinary income tax. The income tax due on the distribution will be spread ...

Investors are understandably concerned about the drop in value of their holdings as the first pandemic in many generations redefined our lives, seemingly overnight. HBS believes that investment processes, grounded in understanding the financial markets and the economy, provide the antidote for impulsive investment decisions. In The Wealth of Nations, a definitive examination of the practical and moral aspects of a market economy in the pre-industrial age, Scottish economist Adam Smith coined the term invisible hand as a guiding principle. Mr. Smith’s explanation of free-market economics in 18th century Great Britain centered on the belief that market participants always act in their own interest. A marketplace of sellers and buyers making voluntary transactions unleashes powerful economic forces — the invisible hand. In mid-February, approaching the 11th anniversary of the record-long bull market and primarily focused on maximizing returns, investors began to deal with the reality of t...

Investors are understandably concerned about the drop in value of their holdings as the first pandemic in many generations redefined our lives, seemingly overnight. HBS believes that investment processes, grounded in understanding the financial markets and the economy, provide the antidote for impulsive investment decisions. In The Wealth of Nations, a definitive examination of the practical and moral aspects of a market economy in the pre-industrial age, Scottish economist Adam Smith coined the term invisible hand as a guiding principle. Mr. Smith’s explanation of free-market economics in 18th century Great Britain centered on the belief that market participants always act in their own interest. A marketplace of sellers and buyers making voluntary transactions unleashes powerful economic forces — the invisible hand. In mid-February, approaching the 11th anniversary of the record-long bull market and primarily focused on maximizing returns, investors began to deal with the reality of t...

The current pandemic environment proves how unpredictable this world can be throughout a person’s career and life. That’s why the value of HANYS Benefit Services’ participant education services cannot be overstated: Being there for our clients’ employees is of paramount importance and a key measure of our success. In addition to our plan level consulting services, we offer a dedicated team of highly trained and experienced educators to assist retirement plan participants. Our salaried team members educate employees, with no conflict of interest. Recently, our education services provided timely help for the employees at one of our New York City healthcare clients. From morning through evening, our educator hosted 30 personalized one-on-one telephonic meetings to help employees enroll in the retirement plan, update their savings rates and learn about their emergency options under the CARES Act. The employees appreciated being able to briefly escape the medical crisis and speak with an e...

In March, the market’s “fear gauge,” the VIX, reached 82.7, the highest close in its 30-year history. Daily moves in the S&P 500 averaged +/-5.0% and its 12.0% decline on March 16 was the worst day for the index since Black Monday in 1987. The New York Stock Exchange on March 23 closed the physical trading floor for the first time in its history and moved fully to electronic trading. As headlines focused on the equity markets, the volatility in the fixed income markets was unrivaled. As investors looked to raise cash, dealers, who typically act as shock absorbers for the bond market, were not able to match panicked sellers with willing buyers. A lack of liquidity occurred in the fixed income market and extreme price dislocations occurred. Issues were selling far below their intrinsic value. No segment of the bond market was left out, including Treasuries. Treasury yields collapsed in March to all-time lows and investment-grade credit spreads widened dramatically, experiencing an un...

We are in unprecedented times and companies are facing a multitude of challenges in many aspects of business. Here at HANYS Benefit Services, we are committed to helping guide our clients through these times. Below are important considerations for retirement plan sponsors during the coronavirus pandemic. Eye on compliance. Remote work conditions have put distance between many collaborative human resources staff. It’s critical to keep a focus on key administrative tasks such as the timely funding of plan contributions and processing of participant requests. Keeping your retirement plan vendors apprised of any staff reductions and plan changes can help ensure smooth plan administration during this time. Working with a tighter budget Plan contribution flexibility. If budget constraints exist, consider whether your retirement plan’s contributions are mandatory or discretionary, and, if necessary, whether you are able to amend your plan to provide some relief at this time. Plan expens...