- A majority of 816 U.S. companies surveyed in April by Willis Towers Watson said they have made, or plan to make, access to 401(k) plan assets easier for employees during the COVID-19 pandemic, according to a statement.
- Nearly two-thirds of respondents (65%) said they increased access to in-service distributions, essentially an employee’s ability to take distribution from an employee-sponsored retirement plan without terminating his or her employment, while another 16% were either planning or considering to do so in 2020. Other actions included allowing plan participants to defer loan payments and increasing the maximum available for loan payments, Willis Towers Watson said.
- Fewer surveyed employers (12%) said they suspended matching contributions for retirement plans, per the statement, but those operating in hard-hit industries like retail and business services were more likely to report doing so. Nearly half of all respondents (49%) had raised awareness of emergency cash resources during the pandemic, such as loan products, defined contribution hardship withdrawals and loans, and health savings accounts.
Some employers have decided to reduce spending on retirement benefits as the pandemic lingers, which is similar to what observers saw during the late 2000s recession, Robyn Credico, managing director, retirement, at Willis Towers Watson, said in the statement.
"These are difficult times emotionally and financially for many employees," Credico said. "Making cash available from defined contribution plans is an easy, relatively inexpensive way to provide much needed assistance to employees."
Regulatory responses at the federal level aim to provide those enrolled in employer-sponsored retirement plans more options. The Coronavirus Aid, Relief, and Economic Security (CARES) Act, for example, expanded distribution options and favorable tax treatment for coronavirus-related distributions for those enrolled in employer-sponsored 401(k), 403(b) and IRA plans, according to an IRS guidance document. The CARES Act also increased the limit such individuals may borrow from an eligible retirement plan and allowed plan sponsors to provide such individuals an additional year to repay plan loans.
But that assistance may not reach all workers. Some companies dealing with financial troubles may decide to conduct plan freezes or otherwise suspend or reduce company matches, media outlet InsuranceNewsNet reported in April.
Aside from retirement, healthcare benefits are another area of financial concern for employers. A Willis Towers Watson analysis found that while COVID-19 testing and treatment could lead to healthcare cost increases by as much as 7% for large, self-funded employers in 2020, those costs could also be offset if workers choose to defer certain types of medical care during the pandemic.