Plan Sponsors Familiar with CARES Act, But Unclear on its Impact

A strong majority of plan sponsors are familiar with the CARES Act and its provisions that concern retirement plans, but many fewer have a clear view of the impact of the Act on their plans and on participants’ savings, says a new study.
 

The Secure Retirement Institute (SRI) in a recent survey concerning plan sponsors’ familiarity with those provisions and how they affect their plans found that 81% of defined contribution plan sponsors said they are familiar with the CARES Act and those provisions. Among those, it says, plan sponsors in the private sector were 20 percentage points more likely than those in the non-profit sector to be so.

 

But being familiar with the CARES Act does not necessarily spell being comfortable in applying it, SRI found. Slightly more than half of the plan sponsors in the study said they would benefit from guidance from their recordkeeper regarding how the CARES Act will affect their plans.

 

And, SRI adds, nearly 40% of the plan sponsors indicate that they will invoke the Act’s flexibility that allows them discretion to allow withdrawals and loans or not. Slightly more—43%— plan to allow withdrawals and loans under the new law; 19% were unsure whether they would or not. Of those who said they would allow withdrawals and loans, 7% said they will allow loans only; 8% said they will allow only withdrawals; and 28% said they will allow both.

 

SRI also found that the larger a plan is, the more likely it is to allow distributions under the CARES Act —with the largest plans either already making them available or most likely to do so.