This year’s hurricane season has already been noteworthy, and weather projections indicate that “above the norm” levels of stormy weather will continue through the fall. Business owners, especially plan sponsors, are wise to take precautions aimed at limiting disruption during and after storms.
Bullseye?
The National Oceanic and Atmospheric Administration (NOAA) has advised:
“Atmospheric and oceanic conditions have set the stage for an extremely active hurricane season that could rank among the busiest on record. With the peak of hurricane season quickly approaching, NOAA’s National Weather Service urges everyone to know their risk; prepare for threats like damaging winds, storm surge and inland flooding from heavy rainfall; and to have a plan if asked to evacuate.” Homeowners of course need to take precautions, and so to do business owners:
It’s not smart to wait until our businesses are in the target range of a storm to plan for safeguarding records and data, develop communications strategies, and arrange support for impacted employees, plan participants and beneficiaries. “An ounce of prevention” is an especially important approach for retirement plan sponsors. The National Association of Plan Advisors (NAPA) offers this guidance about preparing for storms:
Records. The U.S. Small Business Administration (SBA) suggests protecting or relocating vital records, including insurance policies. The IRS has similar suggestions, such as placing original documents such as tax returns, titles and insurance policies inside waterproof containers in a secure space.
Fiduciary Bonds. The IRS suggests that employers that use payroll service providers should ask the provider if it has a fiduciary bond in place, which could protect the employer if the payroll service provider goes into default.
Data. The SBA suggests backing up all data on servers and personal computers. They further argue that one should consider taking backup tapes and data along in an evacuation if the backup site is within the area that may be affected by the storm.
Communication. The SBA reminds that it is important to have contact information on hand concerning all employees, vendors, and clients.
Labor and employment law attorneys also advise plan sponsors to be at the ready with relief plans for participants impacted by storms, and suggest preparatory steps including:
- understand relief options and choose which you will offer;
- communicate available relief options to participants;
- set procedures with administrators and financial institutions to facilitate processing requests; and
- amend plans by applicable deadlines to reflect the relief features that will be offered.
Of course storm preparations are not complete without a carefully thought out “after” plan. Advisors point out that a solid post-storm strategy includes readiness for:
Rebuilding documents. Reconstructing records after a disaster may be required for tax purposes, getting federal assistance or insurance reimbursement, the IRS reminds. It provides a webpage, Reconstructing Records, to help….
Benefits administration. It is possible that a major storm could make it difficult for an employer or plan sponsor to make contributions to a pension plan or 401(k) on time, Fisher Phillips…remind that the IRS, Department of Labor, and Pension Benefit Guaranty Corporation often extend deadlines for those who live and are based in areas affected by a natural disaster….
Recordkeeping. Fisher Phillips…remind that an employer or plan sponsor is legally required to submit funds to the recordkeeper or trustee “as soon as reasonably possible….” But if a plan’s recordkeeper is not functioning… an employer… should “take reasonable steps” to put the funds…in a separate account for the participants until normal functions can be resumed.
Cover Up Too…
In good times and bad, plan sponsors are held to the high standards of ERISA when it comes to protecting the data and assets of participants. Protection is the only way to mitigate the many risks inherent with plan sponsorship:“Fiduciary liability insurance is an indispensable measure to ensure sponsors and their businesses are protected with defense costs and penalty limits.” Colonial Surety is here to help business owners of every size with affordable fiduciary liability insurance. Armed with our coverage, if you face claims of alleged or actual breaches of duty in connection with the employee retirement plan, you’ll be protected with defense costs and penalty limits up to $1,000,000. Uniquely, Colonial even includes Cyber Liability Insurance, locks in multi-year rates and offers installation payments. Conveniently, our Fiduciary With Cyber liability package is now available with a one year commitment. Protect yourself, your business and plan, for a few dollars a day, now:
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Colonial Surety Company is rated “A Excellent” by A.M. Best Company, U.S. Treasury listed and in business all across the country. Serving customers since 1930, we are the trusted source for the pension industry to secure legally required ERISA bonds, fiduciary liability insurance and cyber-liability insurance. We help safeguard plan sponsors, pension professionals and financial advisors — and keep their businesses compliant — with pain-free, efficient, and friendly service every time.