How Are Plan Sponsors Responding to the COVID-19 Pandemic?

New survey finds a gap between large and small employers in adopting the optional distribution and loan provisions of the CARES Act, and in decisions regarding suspending matching contributions.

Just two weeks after the enactment of the Coronavirus Aid, Relief, and Economic Security Act (CARES), a plurality of employers are still evaluating the retirement-related optional provisions, according to a survey by the Plan Sponsor Council of America (PSCA).

Considering the breadth and potential depth of those retirement plan options now on the table, it is perhaps not surprising that nearly half (47.4%) of the 152 plan sponsor respondents indicated they are still deciding which of the CARES Act provisions to implement, according to the survey by PSCA, part of the American Retirement Association. Larger plans (plans with 5,000 or more participants) are more likely to have made a determination, with two-thirds already making a decision (66.0 percent), while fewer than half of smaller plans (plans with fewer than 200 participants) have (48.3 percent) made one.

“Employers are being forced to make difficult decisions between business needs and what is in the long-term best interest of their participants,” says Hattie Greenan, Director of Research. “They want to provide immediate relief to employees directly impacted by COVID-19 but are also thoughtfully considering the impact on their employees’ long-term financial stability and ability to retire.”

Implementation of Optional CARES Provisions

Overall, plan sponsors seem somewhat more open to adopting emergency distribution provisions than increasing loan limits, with nearly half (45.4%) already moving to do so, compared with just a third (32.2%) adopting the new loan provisions.

Additional findings include:

  • COVID-19 distribution: Nearly 70% of large organizations are allowing the distribution of up to 100% of the vested account or $100,000 vs. only 20.7 percent of smaller organizations.
  • Distribution repayment: Nearly half of respondents (46.7 percent) have embraced the option to allow repayment of coronavirus-related distributions during the next three years. This is also size-correlated with 68.1 percent of large organizations allowing it versus only a third of smaller organizations.
  • Loan limits: While a third of respondents overall are increasing the plan loan limits in COVID-19 qualified circumstances to $100,000 or 100% of vested account balances, this is true of only 17.2 percent of small organizations, vs. nearly half (46.8%) of large organizations.
  • Loan payments: More than 60 percent of large organizations are suspending loan payments due on or before Dec. 31, 2020 and deferring repayment for up to a year, versus only one-in-five (20.7 percent) of small organizations.

About one-in-ten (9.2 percent) aren’t planning to adopt any of these new options, though that is the case at only 2.1 percent of large organizations.

“During the financial crisis of 2008-2009, about 20 percent of companies suspended or reduced plan contributions, and most resumed them relatively quickly,” stated Greenan. “While the current situation is very different, our current survey results suggest approximately the same numbers. Whether they hold largely depends on the length and ultimate severity of the current crisis, especially as it relates to small businesses.”

Plan Changes

While the full impact of the COVID-19 pandemic is not yet known, most plan sponsor respondents – 76.5 percent – are not currently contemplating changes to their current plan designs as a result, including more than 90 percent of small organizations. However, more than twenty percent of large organizations indicated they are suspending matching contributions, while only 3.6 percent of small plans have moved to do so.

  • Suspending Matching Employer Contributions: 16.3% of plans
  • Reducing Matching Employer Contributions: 8.7% of plans
  • Suspending Non-matching (Profit Sharing) Employer Contributions: 6.5% of plans
  • Reducing Non-matching (Profit Sharing) Employer Contributions: 2.2% of plans

Other plan changes plans sponsors are making in response to the COVID-19 pandemic include:

  • Changes to loan provisions including repayment after termination
  • Allowing loans during a leave of absence,
  • Increasing the number of loans allowed
  • Changing timing of employer contributions from per-pay-period to annual and making a year- end true-up contribution.

As noted above, the CARES Act and its provisions are just two weeks old. Plan sponsors and their service providers are still dealing with an enormous array of complex and sensitive human resource policy, employment, compensation, and benefit issues. The full report is available here. Contact PSCA at This email address is being protected from spambots. You need JavaScript enabled to view it. with any questions.

PSCA, in conjunction with the American Retirement Association, has developed a list of resources for plan sponsors regarding the impact of the Coronavirus on retirement plans. Those resources can be accessed at

About the Plan Sponsor Council of America
The Plan Sponsor Council of America (PSCA), part of the American Retirement Association (ARA), is a diverse, collaborative community of employee benefit plan sponsors, working together on behalf of millions of employees to solve real problems, create positive change and expand on the success of America’s voluntary, employer-sponsored retirement system. With members representing employers of all sizes, PSCA offers a forum for comprehensive dialogue. By sharing our collective knowledge and experience as plan sponsors, PSCA also serves as a resource to policymakers, the media and other stakeholders as part of its commitment to improving retirement security for millions of Americans. For more information, visit


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