[Further Update: Securian Financial is waiving all COVID-19 related 401(k) distribution fees for the retirement plans it serves as recordkeeper and, moving forward, will permanently make all hardship distributions fee-free to customers—regardless of the triggering event. Additionally, Securian Financial will act as an ERISA 3(16) fiduciary for participant distributions and loans under the CARES Act, at no additional cost, for its existing full-service 401(k) employer customers. The company will also provide these customers with a suite of wellness services to make available to their employees, free-of-charge, through the end of the year.]
[New: Nationwide say it “stands ready” to waive or reimburse any Nationwide-imposed fees for loan initiation, distribution or hardship withdrawals. For those participants in plans who adopt these provisions and are impacted by the CARES Act, the fee waiver is effective from March 27, 2020 through September 30, 2020. “Nationwide’s retirement plans business has also elevated and accelerated processes to respond to customer needs and is ready to provide participants with educational resources to help them weigh whether withdrawals or loans are the best option for their family,” the company said Wednesday.]
[Update: Transamerica announced on Tuesday that it, too, will waive all coronavirus-impacted withdrawal fees within retirement plans as part of its CARES Act Customer Support Initiative. Fidelity Investments also confirmed that it has never charged for hardship withdrawals (before or during the current COVID-19 crisis), and “while the distribution available under the CARES Act is not a hardship withdrawal, we are not charging fees for those distributions.”]
In the wake of the passage of the CARES Act and the ongoing coronavirus pandemic, a number of large retirement plan recordkeepers are waiving certain fees and taking other steps to help offset the hardship many Americans are experiencing.
In addition to checks in the amount of $1,200 sent directly to the majority of Americans, the Coronavirus Aid, Relief and Economic Security (CARES) Act includes provisions to waive required minimum distribution (RMD) rules for DC plans—including 401k, 403b, 457b plans and IRAs—for calendar-year 2020.
It also includes a key 401k-related provision that allows for hardship distributions from qualified retirement accounts for coronavirus-related purposes of up to $100,000 from 401ks or IRAs for those under 59½, without incurring the standard 10% early withdrawal penalty.
Here is a list of participating companies in alphabetical order:
Empower Retirement
Empower Retirement announced last week that it is waiving fees on new loans and hardship withdrawals. The Colorado-based company says the changes cover “all tax-qualified workplace retirement plans administered by Empower that permit such distributions, and include new provisions allowed for under the recently enacted CARES Act.”
“We must do everything we can to accommodate the immediate financial needs of our customers,” Edmund Murphy, Empower Retirement President and CEO, said in a statement. “Some are already in financial distress right now and need access to their retirement savings to support their loved ones. We are taking these steps to help those families.”
Empower added that the fee waiver will remain in place until further notice, depending on circumstances in the economy and financial markets.
It also announced $250,000 in donations to community organizations fighting the COVID-19 pandemic.
John Hancock Retirement
John Hancock Retirement recently instituted the following fee policies to help their plan sponsors and participants that might be facing economic stress:
- Waiving John Hancock fees related to participant hardship withdrawals and suspending any John Hancock fees for plan amendments made in response to the COVID-19 pandemic
- These changes went into effect on April 3, 2020, and will last through December 31, 2020, at which time fees will revert back to standard charges
“This announcement comes on the heels of the CARES Act, which waived the 10% early withdrawal penalty for distributions up to $100,000 for coronavirus-related purposes and increased the 401k loan limit to $100,000,” according to the company.
MassMutual
Massachusetts Mutual Life Insurance Company (MassMutual) announced that it too is waiving fees on hardship distributions and more for retirement plan participants.
“We understand that challenging times compel some individuals to consider tapping retirement savings to meet their immediate needs and these new provisions will be helpful,” Teresa Hassara, head of workplace solutions for MassMutual, said in a statement. “That said, before anyone dips into their retirement savings, it could be beneficial to speak with the plan provider, a financial professional or employer to help weigh options and make a thoughtful decision.”
To start, MassMutual is offering several new provisions enabled by the CARES Act for its 32,000 retirement plan sponsors to offer employees enrolled in a MassMutual retirement plan, which reflects three million participants. Plan sponsors can ‘opt-in’ to offer:
- A suspension of required minimum distributions for 2020
- A temporary increase of up to $100,000 for loans and an extension of up to one year for loan repayment
- A penalty-free COVID-19-related distribution capped at $100,000 with no mandatory tax withholding requirements and the ability to repay distributions
Furthermore, until further notice, MassMutual is also waiving fees associated with eligible retirement plan hardship distributions, loan initiations, and withdrawals under the CARES Act. MassMutual will also continue to pay third-party administrators’ portions of these fees.
OneAmerica
In an effort to show support to its retirement plan participants during this unprecedented crisis, OneAmerica today announced it is immediately waiving fees for all hardship withdrawals, including those distributions related to COVID-19.
The decision, announced by Sandy McCarthy, president of retirement services at OneAmerica, eliminates administrative fees for hardship and COVID-19 related distributions effective April 7, 2020 through December 31, 2020.
“At OneAmerica, we recognize that this is a time of uncertainty for many of our participants,” McCarthy
said. “We’re hopeful that this gesture will help to ease some of the burden.”
OneAmerica said Tuesday that it has chosen to automatically implement the COVID-19 distribution option for all plans that currently allow hardship withdrawals and has provided an opt-out for those plans that do not wish to
offer the provision.
The firm is also working with plan sponsors who do not currently offer hardship withdrawals, but would like to begin offering the provision. The special withdrawal rules apply to eligible retirement plans, which include qualified 401(k) plans, qualified 403(a) annuity plans, 403(b) plans, and governmental section 457 deferred compensation plans. OneAmerica has chosen to waive the administrative fee for these COVID-19 distributions and has also expanded the fee waiver to include all hardship withdrawals.
Principal
Principal Financial Group said Monday it is waiving some retirement plan-related fees.
Building on the passage of the Coronavirus Aid, Relief, and Economic Security Act (CARES Act), Principal and Wells Fargo Institutional Retirement & Trust (IRT) are temporarily waiving participant-paid distribution and loan origination fees for participants taking tax-favored withdrawals, hardship withdrawals, or loans from their employer-sponsored retirement accounts.
Additionally, retirement plan sponsors will have fees temporarily waived for plan amendment changes to allow participants to access these programs, or who need to reduce or remove their employer contributions.
SEE FULL STORY: Principal Waiving Some Fees for 401k Plan Sponsors, Participants
Transamerica
Transamerica said Tuesday that the Aegon Transamerica Foundation made a contribution of $500,000 to Direct Relief to support ongoing coronavirus (COVID-19) relief efforts.
As part of their work in the U.S., Direct Relief is coordinating with public health authorities, nonprofit organizations and businesses across the country to provide equipment, including masks, exam gloves, isolation gowns and other protective gear, to healthcare organizations.
“Direct Relief is so deeply grateful for the leadership and commitment reflected by Transamerica’s action today,” Thomas Tighe, President and CEO of Direct Relief, said in a statement. “Transamerica’s contribution will be put to immediate use and is a perfect example of what’s needed as we all face this historic threat to the health of people everywhere.”
Transamerica’s contribution to Direct Relief is part of what it calls is a wide-ranging effort to support the communities where the company’s employees live and work. This effort includes emergency support for the Maryland Food Bank and a contribution to the Children’s Hospital Colorado Foundation’s Caregiver Emergency Relief Fund.
In addition, Transamerica continues its commitment to the United Way as the nonprofit seeks to provide accurate information and vital services for those in need during the crisis. Transamerica has an annual matching contributions program for employees who wish to donate to the United Way.
T. Rowe Price
T. Rowe Price Retirement Plan Services Inc. announced Tuesday that it will waive transaction fees for all new 401k loans and coronavirus-related distributions, effective immediately.
“We recognize that this is a challenging time for many plan participants,” Kevin Collins, head of T. Rowe Price Retirement Plan Services, Inc., said. “We have, and always will be committed to helping our retirement plan sponsors and participants in any way we can, including navigating this challenging economic environment.”
Voya
Voya Financial announced last week that it took several actions to help Americans address COVID-19 related challenges.
“As our nation works together to address the many challenges that COVID-19 has created, we want to do our part to help our customers, and all Americans, manage through this difficult time,” Rodney Martin Jr., chairman and chief executive officer of Voya Financial, said in a statement. “Our response has been—and will continue to be—focused on people first. I’m incredibly proud of how quickly our employees have adapted and pivoted to help us deliver the support and guidance that our customers need during this difficult time.”
Beginning April 1 and going through Sept. 30, Voya will credit back to participants in its defined contribution plans (in each case, if the plan permits the distribution or loan):
- Fees associated with coronavirus-related distributions allowed under the CARES Act;
- Hardship distribution fees; and
- Loan initiation fees.
“Depending on utilization of the credits, Voya estimates that the program represents a collective savings to individuals of between $10 million and $20 million,” the company noted.
With more than 20 years serving financial markets, John Sullivan is the former editor-in-chief of Investment Advisor magazine and retirement editor of ThinkAdvisor.com. Sullivan is also the former editor of Boomer Market Advisor and Bank Advisor magazines, and has a background in the insurance and investment industries in addition to his journalism roots.
