CARES Act (Coronavirus Aid, Relief, and Economic Security Act)

The following communication was sent to PDC Clients on: 3/31/2020

Hello Everybody,

We hope you all are doing well and getting through these tough times. As promised in my previous email, we want to provide you with updates as they become available. Well, on Friday March 27th the CARES Act (Coronavirus Aid, Relief, and Economic Security Act) was signed by the President. This legislation contains many provisions aimed at providing relief to retirement plans and plan participants.

Below is a summary of the changes. Our team here at Plan Design Consultants stands ready to support you and help you take advantage of any of these new rules.

Qualified Individuals The CARES act creates additional flexibility concerning coronavirus related distributions and modifies participant loans for “qualified individuals.” What is a qualified individual?

• A person diagnosed with COVID-19

• A person that has a spouse or dependent(s) diagnosed with COVID-19 or

• A person that experiences adverse financial consequences due to the coronavirus

o Being quarantined, furloughed, or laid off

o Having their work hours reduced

o Being unable to work due to lack of childcare

o Closing or reducing hours of a business the individual owns or operates

Coronavirus-Related Distributions The CARES Act permits distributions from January 1, 2020 to December 31, 2020 to qualified individuals (see above) of up to $100,000. In addition, the 10% early withdrawal penalty for such distributions is waived and the 20% federal income tax withholding can be ignored. The distribution can be repaid to the plan within 3 years to gain tax-free rollover treatment. Taxable amounts required to be included in gross income can be spread over a 3-year period.

New Rules for Participant Loans For 180 days starting from the CARES Act's enactment, participant loan limits to qualified individuals (see above) are increased to the lesser of: (a) 100% of a participant's vested account balance, or (b) $100,000. Also, for qualified individuals, participant loan repayments may be delayed for 1-year.

Changes to Required Minimum Distributions (RMDs) The CARES Act waives all RMDs which would otherwise be due during the 2020 calendar year, including the 2019 initial RMDs which would otherwise have been due by April 1, 2020.

Plan Amendments and Compliance Deadlines Employers may start using CARES Act retirement plan provisions immediately. Plan amendments for adopting relief under the CARES Act would be due no later than the last day of the first plan year beginning on or after January 1, 2022. The CARES Act also gives the U.S. Department of Labor authority to postpone certain deadlines that apply to ERISA-covered plans. Any postponements must be due to a public emergency declared by the U.S. Department of Health and Human Services. This provision includes the current public emergency for COVID-19.

In addition to the above summary, check out this FAQs created by the American Retirement Association

https://www.asppa-net.org/sites/asppa.org/files/ARA_Covid_QA.pdf

J.D. Carlson

CEO-President

COVID-19

The following communication was sent to PDC Clients on: 3/24/2020

To our community, I am hoping to not repeat the same email that has filled your inbox over and over again. You know the one, where I tell you how valued you are as a customer, how these are unprecedented times and how our support of you remains strong. All three of those things are obviously true… but, let me get straight to the point and tell you what you need to know.

• Plan Design Consultants has been providing retirement plan compliance work since 1975. We have successfully faced many perilous times…including the dot com bust, 9/11 and the 2008 financial crisis. We are confident in our ability to support our clients through these critical times.

• Our full staff is sheltering in place in their homes & working remotely. We are 100% operational and will continue as normal. 75% of our team have already been working from their homes for many years now.

• We have tweaked our operations and prepared our staff to deal with surges in distributions (loans, hardships, etc.) We stand ready to help participants gain access to cash if they need it.

• Stay Tuned: The government is working on fast legislation that will offer relief in the areas of retirement plans. We will keep you informed and adjust our operations so you can take advantage of these changes.

While we don’t have control over the situation impacting us all, we do have control over how we handle it and how we support each other. If you have any questions or need help with your retirement plan, please let us know. We are here for you.

J.D. Carlson

CEO-President