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Where tax-exempt plans are focusing in uncertain times

By Sandy McCarthy, president of Retirement Services, OneAmerica

In the face of these uncertain times, we’ve seen new-found levels of appreciation and respect for the organizations providing vital assistance to our communities and citizens. As you know, hospitals and healthcare systems, social and community-service organizations, and religious institutions have stepped up to provide care, support and relief to those in need. These tax-exempt organizations are the foundations of our communities and have always been a top focus for OneAmerica®.

Though 2020 – with the SECURE Act, the COVID-19 pandemic and the CARES Act – has presented challenges for all plan sponsors, tax-exempt plans have some unique concerns and considerations.
Here are a few things we’re urging tax-exempt employers to keep top-of-mind as they navigate the current environment.

Responding to the SECURE Act: This landmark legislation provides the most significant changes to the retirement industry in more than a decade and makes investing for retirement more accessible to millions of Americans. Though the most dramatic changes are for 401(k) plans, there are also provisions impacting 403(b) plans and participants. From tax credits to distributions and more, it’s important for your plan to work with a company that understands the ins and outs of this legislation.

Benefiting from the CARES Act: Aimed to provide relief in crisis, the CARES Act has a number of provisions that benefit tax-exempt organizations. Depending on each unique situation, organizations may want to take advantage of specific provisions – loan resources, employee retention credits or deferring employer payroll taxes. It’s beneficial to work with a company that understands your challenges and helps you best utilize available relief.

Providing for participants’ needs: These uncertain times are challenging organizations and individuals alike. Ensuring your employees have the resources they need to understand recent legislation, market volatility and financial wellness in general will help support them to make the decisions that best align with their needs. And, employee education should cover more than just financial wellness. We recently introduced materials to focus on employees’ emotional wellbeing – understanding that the two are deeply connected.

Complying with the 403(b) plan restatement requirement: The Internal Revenue Service (IRS) has extended the 403(b) restatement deadline from March 31 to June 30, 2020. By restating plan documents onto an IRS-approved document, the IRS is essentially putting a seal of approval on the plan – providing it the type of protection that 401(k) plans have had for decades. Restatement or transferring the existing plan provisions also gives plans a chance to fix errors proactively, and may be an optimal time to review the plan itself. You can learn more about plan restatement here.

Maximizing plan design: Plan design can be vital to achieving desired outcomes, and it’s necessary to keep a constant pulse on whether the plan is operating as intended. COVID-19 has caused many organizations to reassess elements of their plan, like employer contributions, and make difficult decisions on other issues, like temporarily eliminating matching contributions. Your plan’s service provider should be able to work with you to ensure your plan is designed in a way that meets your goals and aligns with your mission.

Ensuring your service is customized: We believe tax-exempt employers do best to work with a company that understands the nonprofit sector and can offer customized solutions that meet each plan’s unique needs. With a 55-plus-year history of serving tax-exempt plans, the companies of OneAmerica have taken a unique approach to offering guidance in the COVID-19 era. Combining industry research with findings from virtual client focus groups, we created materials for our nonprofit and healthcare clients to outline industry issues and hot topics, as well as action items to consider. It’s important to keep in mind that off-the-shelf, cookie cutter solutions aren’t always best-suited for tax-exempt plans, and these employers should ensure they’re getting the customized support that meets their needs.

Connecting with a financial professional: When compared to the for-profit market, many tax-exempt organizations are underserved in this area – with approximately 46% of plans not connected with a financial professional. Now more than ever, these plans may wish to work with a trusted professional who can help them understand and react to changing conditions and legislation.

In these truly unprecedented times, we’re seeing more reliance than ever on the hospitals and nonprofit organizations that exist to care for and support those in need. As the foundation of our communities, tax-exempt organizations continue to be essential. These vital organizations deserve the support and assistance they need to thrive.

As president of Retirement Services, Sandy McCarthy leads the OneAmerica® team offering defined contribution and defined benefits services with a strong focus on customized retirement plans through highly personalized administration and recordkeeping services. She brings more than 30 years of industry experience, including key leadership roles at Mercer, ING (now Voya), and CitiStreet.

Previously she spent seven years in leadership roles as a senior partner at Mercer, where she served as North America Region Benefits Administration Business Leader, following a position as CEO and board member Asia Pacific Outsourcing Business living in Melbourne, Australia.

McCarthy graduated with honors from Tufts University, earning both her undergraduate in sociology/education and Master of Arts degree in education, then completing an MBA from the Fuqua School of Business at Duke University.

She currently serves on the boards of the American Red Cross of Indiana (ARC), Junior Achievement of Central Indiana (JACI), Employee Benefit Research Institute (EBRI) and LIMRA LOMA Secure Retirement Institute (SRI).

OneAmerica is the marketing name for the companies of OneAmerica®. Products issued and underwritten by American United Life Insurance Company® (AUL), a OneAmerica company. Administrative and recordkeeping services provided by McCready and Keene, Inc. or OneAmerica Retirement Services LLC, companies of OneAmerica which are not broker/dealers or investment advisors. Provided content is for overview and informational purposes only and is not intended and should not be relied upon as individualized tax, legal, fiduciary, or investment advice.

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