Quarterly Insight, Q2 2020

Economic Outlook at a Glance – (Q2) 2020 Outlook

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This quarter’s themes: Cautious is the watchword; Growth concerns; Geopolitical risks remain; Fundamentals and risk assessment are key. To read more about these themes, click here.

Legislative News and Updates

Swift passing of the CARES Act: The Coronavirus Aid, Relief, and Economic Security Act, commonly known as the “CARES Act” passed on March 27, 2020. The retirement specific provisions for “qualified individuals” include:

  • Option for employers to allow participants to take a COVID related distribution of up to $100,000
  • Option for employers to allow participants to increase loan amounts from $50k to $100k or 100% of account balance
  • RMDs due in 2020 are waived for profit sharing, money purchase, and 401(k) plans

Read CARES ACT attachment for more information.

Final Electronic Disclosure Rule Published by DOL: On May 27, 2020, The U.S. Department of Labor (DOL) and the Employee Benefits Security Administration (EBSA) published their final ruling to expand the ability of private sector employers to communicate required retirement plan disclosures and other information online or by email. The effective date of this ruling is July 27, 2020. For more information, click here.

Important Deadlines:

  • June 30th ADP/ACP refunds for EACA plans are due to highly compensated employees (HCEs) to avoid a 10% excise tax on the employer.
  • July 31st Form 5500 is due to the IRS for plans with a December 31 plan year-end—i.e., due seven months after year-end.
  • July 31st Form 5558 is due to the IRS, also called the Application for Extension of Time to File Certain Employee Plan Returns. It is used to apply for an extension to file forms 5500 and/or 5330.

Note: Not all deadlines mentioned above are required for each retirement program. Ask your Alliant Retirement Consultant today which ones apply to your Plan. Click here for the 2020 ERISA Plan Compliance Calendar.

Industry Insider Tips – Avoid Pitfalls in Plan Administration

COVID-19 May Affect Nondiscrimination Testing

To avoid failing ADP and ACP testing, industry experts recommend employers utilize mid- or quarter-year projection testing. Doing so can foresee outcomes. Read more here.

BEAR MARKET RALLY . . . OR A NEW BULL MARKET?- The S&P 500 gained +12.8% (total return) in April 2020, its first “double-digit” gain since October 2011 and its best month since January 1987. (Source: BTN Research).

COULD THIS HOUSING TREND REVERSE? – In the 3 years through 3/31/20, the number of US households (both owners and renters) has increased by +5.5 million to 124.4 million. The number of owner households has increased by +5.6 million to 81.3 million while the number of renter households has declined by 0.1 million to 43.1 million (Source: Census Bureau).

JUST SITTING SOMEWHERE- 64% of the commercial aircrafts operated by airlines worldwide have been removed from daily usage and are currently in storage (Source: Upgraded Points).

SOURCE: MFS “By The Numbers” Newsletter May 4, 2020 Edition

Sarah Keibler, Retirement Plan Representative at 1420 5th Ave Ste 1500, Seattle WA 98101 Sarah.Keibler@alliant.com (206) 204-9176. Advisory Services offered through Alliant Retirement Consulting, a federally Registered Investment Advisor. This information was developed as a general guide to educate plan sponsors, but is not intended as authoritative guidance or tax or legal advice. Each plan has unique requirements and you should consult your attorney or tax advisor for guidance on your specific situation. Due to volatility within the markets mentioned, opinions are subject to change with or without notice. Information is based on sources believed to be reliable; however, their accuracy or completeness cannot be guarantee. Past performance does not guarantee future results The S&P 500 index is a group of the 500 largest U.S. stocks, weighted by market capitalization. The index is widely considered to be the best indicator of how large U.S. stocks are performing. Investors cannot invest directly in indexes. The performance of any index is not indicative of the performance of any investment and does not take in to account the effects of inflation and the fees and expenses associated with investing.