National Insurance Awareness Day: Why June 28 Should Be on Your Calendar

Amid life’s many uncertainties, and especially in extraordinary times such as these, it’s good to step back every so often to take an objective look at where you stand. Fortunately, June 28th has been designated “National Insurance Awareness Day.” It’s an annual reminder to review your insurance cover; to assure it is proper and adequate; to make sure all that has evolved since your last comprehensive look is represented in the protection. We recommend that you get in touch with an insurance professional for such a review. If you are looking for an objective review of your current coverage and needs, look no further, we stand ready to assist.

For our team at Conrey Insurance Brokers and Risk Managers, June 28th is yet another opportunity to do what we do every other day throughout the year—help our clientele achieve peace of mind by knowing what matters most to them is properly protected. We look forward to discussing your current situation by applying our “Three Ps” of insurance planning—they are:

• Prevention – Everyone is better off when they can avoid a claim before it happens; we provide risk management advice that can assist in preventing losses. Are you taking common-sense precautions to mitigate risk? Are you in compliance with all suggestions, guidelines and safety practices?

• Policy – Routinely, life evolves, business evolves, and needs change. Isn’t it worthwhile to ensure that your policy is aligned with your current situation?

• Proper Protection – As an independent broker tied to no specific insurance carrier, we evaluate your changing needs and provide objective recommendations—not “cookie-cutter” solutions, and from the entire marketplace, not just one insurer. What’s changed in the marketplace; what does it cost to rebuild or to replace items; are your current policies still cost-competitive? Do they still reflect the assumptions made when originally written? Has your advisor kept current, regularly checking in as this article suggests? That’s part of “The Conrey Difference.”

As a full-service firm, Conrey Insurance Brokers and Risk Managers offers experts specializing in virtually every major area of insurance and financial services. This National Insurance Awareness Day, or anytime it’s convenient for you, please consider giving us a call at 877-450-1872, or click here, to set up a meeting and discuss your insurance needs—no matter what day in the calendar year, that day will be YOUR insurance awareness day.

Precisely Tailored Solutions Require Specialized Expertise

Financial services specialists recognize that no one person can be an expert in all the areas of importance to individuals and businesses. Access to a team that brings together a diverse range of specialized expertise under one roof makes it easier to find optimal solutions for your specific goals. That’s why our Conrey Financial Services Department keeps growing. We continue to welcome new, experienced individuals to the department’s functional areas. Here’s an introduction to our current team members.

Financial Planning and Wealth Management – Mike Lambrakis, CFP® and Michael Hu, CFP®
A CERTIFIED FINANCIAL PLANNER™, Mike has served as a Partner Advisor with AdvicePeriod, as a Portfolio Strategist and Wealth Advisor at Beacon Pointe Advisors, and as a Financial Advisor at Wells Fargo Advisors.

Also a CERTIFIED FINANCIAL PLANNER™, Michael has held positions as an Advisor at AdvicePeriod, as well as at a private wealth management firm where he was responsible for developing, implementing and ongoing monitoring of complex financial plans.

Life Insurance, Annuities, Long-Term Care and Disability – Michael Robinson
Michael is a 24-year veteran of the insurance and financial services industry. Co-Founder and Managing Partner of BluePrint Insurance Services, he has extensive experience partnering with Registered Investment Advisors and comprehensive financial advisors across the country.

Individual Health and Medicare Services – David Mak
David been accumulating firsthand knowledge of the changing health insurance industry since he began helping clients with individual medical and Medicare insurance solutions in 2003. A self-described “numbers guy,” he spent his early years in financial reporting for corporations such as Douglas, Boeing, and Scantron.

Creation and Administration of Business Retirement Plans – Michael Gorelick, APR
Michael is an Accredited Pension Representative, and a frequent presenter at retirement plan workshops and webinars. His decades of experience include the role of President at Benefit Equity, Inc., a retirement plan administration and benefits consulting firm serving small-to-midsize businesses.

Group Health Benefits – Kelly Moore, CEBS and Cathy Solomon
Kelly is a Certified Employee Benefits Specialist with over 20 years of experience managing plans for diverse organizations, including serving as Principal and Senior Client Executive at benefits firm OneDigital. She previously managed plans for small- to Fortune 500-sized firms at Marsh, one of the world’s largest employee benefits firms.

Cathy has served as a group health insurance broker and employee benefits strategist for companies in a wide variety of industries, acting in her role as a Client Executive at OneDigital. She specializes in analyzing, evaluating and managing a variety of plans for small- and mid-market companies ranging from 20 to 250 employees.

To discuss our services in further detail, or to revisit your investments in the context of a customized financial plan, the Financial Services experts at Conrey Insurance Brokers and Risk Managers are here to help. Just call 877-450-1872 or contact us to request a meeting. For more information about our Financial Services, check out our page here.

CARES Act Retirement Plan Provisions

On March 27th, the Coronavirus Aid, Relief, and Economic Security Act (CARES Act), was approved by Congress, to afford massive relief for those suffering as a result of the Coronavirus pandemic.

Besides the financial relief afforded to individuals, as well as loans and other concessions for businesses, the bill includes the following provisions to help participants and employers who sponsor retirement plans.

As always, please check with your Financial Services Professional for clarification on how to take advantage of these new rules.

Executive Summary

The following “relief” is optional:

1. Distributions of up to $100,000 are now allowed to a “qualified individual” who meets any of the following tests:
o The participant has been diagnosed with the virus (as confirmed by a CDC-approved test);
o The participant’s spouse or dependent has been diagnosed with the virus; or
o The participant has suffered financially from the pandemic because:
• The participant was laid off, furloughed, quarantined, or has had reduced hours
• The participant cannot work due to the unavailability of child care because of the pandemic; or
• The participant’s own business has had to close or reduce hours

B. This withdrawal is available to 401(k), 403(b), governmental 457 plans, and IRAs. Income tax will still apply, however, a plan participant can spread the income tax over a three-year period.

C. It is better to take a loan. Loans are available for 100% of your vested account balance up to $100,000 and repayment is delayed for one year. Please note: Most recordkeepers have systems in place to limit loans to $50,000. It will take some time for them to program their systems to allow for more than $50,000. Check with your recordkeeper before offering plan participants this option.

D. The required minimum distribution requirement (RMD) will be waived for 2020.

E. If an employer has more than one plan, the limit is $100,000 for all plans.

Please continue reading if you would like more details. We have also included information on suspending or stopping plan contributions.

Coronavirus-Related Distributions

• Employers can rely on the participant’s certification, by email or letter that they qualify for the distribution.
• The distribution is not subject to the 20% income tax withholding or the 10% excise tax. If not taken as a participant loan, the money is income and will be taxed. However, the tax can be spread out over a period of three years. If you would like to repay the money, to the plan or IRA, it is treated as a tax-free rollover.
• The bill provides no such relief for pensions plans such as defined benefit and cash balance plans.
• Be sure to get a participant distribution form from the recordkeeper or Finacial Services Professional and signed by the employee waiving withholding, because failure to provide that notice is subject to a $100 penalty per participant.

Plan participants can repay these distributions to an employer plan or IRA and the plan must allow for such repayment. Because of the uncertainty about how repayment of coronavirus related distributions will be handled, it may be advisable for participants to take loans first. The loan repayments may be delayed for a year. If the participant ultimately terminates employment within the year, the loan can be converted to a distribution at that time.

Loan Limit Increases and Delays in Repayment

If “coronavirus-related,” the participant loan rule has been modified. You now can take a loan of up to 100% of a qualified individual’s vested account or benefit, up to $100,000. This provision covers loans made up to September 23, 2020. Furthermore, any loan payment due on any outstanding loan, between the date of enactment and December 31, 2020, is delayed up to one year. The five-year repayment period is also extended for one year and interest will accrue on the loan during the delay period. When payments restart the loan will have to be re-amortized.

It is important to confirm with your recordkeeper if postponing loan payments will not trigger a distribution for nonpayment, to prevent an unintended taxable event.

Required Minimum Distribution Requirements for 2020

Required minimum distributions (RMDs) due in 2020 are not required from defined contribution qualified plans, 401(k), 403(b) plans, IRAs, and governmental 457(b) plans. Also, if the required beginning date was in 2020 (i.e., April 1, 2020), and the plan hasn’t already distributed the first RMD, that RMD is waived as well. If the RMD is due to death, the five-year maximum distribution period is determined disregarding 2020.

Single Employer DB Funding Delay

The due date for any required contributions to defined benefit plans (including quarterly contributions during 2020), is extended to January 1, 2021. The minimum amount is increased by the plan’s rate of interest for the interim period.

We suggest you speak with your Financial Services Professional about freezing accruals prior to April 15, 2020, if you need to reduce your 2020 required contribution.

Stopping Employer Required Contributions

As of this date, we have not received anything from the government on waiving required contributions to retirement plans. The American Retirement Association, our industry advocate in Washington D.C., has asked the government to allow for stopping required contributions to 401(k)/403(b) plans, without first giving a 30 day notice. Below are the current rules:

If your plan has a formula or contribution amount, stated in the plan document, the rules mandate the contribution.

Therefore, once participants have fulfilled the requirements to get a contribution, the contribution through date of amendment is required. This means any 2019 related relief must come from the government. There is no word, as of yet, that this this will happen. For 2020, if the plan has a last day employment requirement, or if the number of required hours are such that employees have not yet worked a sufficient number to be entitled to a contribution (1,000 hours), the contribution can be cut back or eliminated. For calendar year plans you need to act before April 15th to amend the plan.

Safe Harbor 401(k) Plan Suspension or Modification

Safe Harbor Contributions can be suspended midyear, however not before participants are given a notice, 30 days before the amendment is effective. Again, our industry has asked the government to waive this rule.

What About Top Heavy Plans?

Many Safe Harbor Plans are also “top heavy” meaning that 60% of the money in the plan belongs to the owner(s). Employers will need to give their eligible employees 3% of pay as a contribution if the plan is “top-heavy.” Contributions are due prior to filing your business tax return for 2019 and it is unlikely that the 3% “top-heavy” rule will be waived for 2020. However, we encourage you to stay tuned, because the government might just decide all required contributions are waived.

Distributions

If a participant does not qualify for the coronavirus-related distribution options discussed above (or if the employer does not want to provide these distributions), then the participant must qualify for a hardship distribution or a termination distribution.

There is a difference between termination of employment and layoffs, furloughs, suspensions, or whatever other synonym you use for stopping work. The answer is not clear. We look for signs of actual employment termination, such as eligibility for unemployment, access to COBRA, and no apparent guarantee of rehire.

If employers are terminating many employees, they need to be aware of this existing rule:

Full Vesting – Partial Plan Termination Rules

If employers reduce their work force by 20% of total plan participants, other than routine annual turnover, plan participants must receive 100% of their account. This is per IRS Rev. Ruling 2007-43 and the vesting schedule does not apply.

What happens if employers provide 100% vesting to terminated employees under the partial termination rule and then rehires the workers? The 20% test creates a presumption that a partial termination has taken place, but facts and circumstances can be used to show that a partial termination, in fact, has not occurred. This can be a very tough call to make and this is another rule our industry has asked the government to modify. We have asked that 100% vesting not be required, if employers rehire the terminated employee by December 31, 2020.

Here at Conrey Insurance Brokers and Risk Managers, we’ve assembled a team of Financial Services professionals to help answer your questions related to the ever-changing events and their effect on your financial well-being. To find out more, visit our Financial Services page or Request a Meeting.

How Current Events can Affect your Investments

No one likes uncertainty, especially the financial markets. If you are wondering how recent disruptive events can potentially affect your investments, read this informational point of view, courtesy of Conrey Financial Services team members Mike Lambrakis, CFP and Michael Hu, CFP.

Q1 2020 - Coronavirus and the Elections

To discuss this information in further detail, or to revisit your
investments in the context of a customized financial plan, our Financial Services experts at Conrey Insurance Brokers and Risk Managers are here to help.
Just call 877-450-1872 to schedule an appointment.