What Retirement Plan Sponsors Need to Know for 2021

December 16, 2020

Retirement Plan

Every industry was affected by COVID-19 this year, and retirement planning is no exception. The CARES Act and the SECURE Act in particular had such a significant impact that we’ll take an in-depth look at both of them in future posts.

For now, as we move into the holidays and prepare for a brand new year, we wanted to plant the seeds for a few things that plan sponsors will need to keep an eye on in 2021.


Hardship distributions got a boost this year with the Coronavirus Aid, Relief, and Economic Security Act (or CARES Act). CARES provides retirement plan participants who have been impacted by the pandemic with greater flexibility and access to their financial assets.

As of now, these new provisions are allowable only for the 2020 calendar year, though an extension of some kind will likely follow for 2021. Plan sponsors should keep an eye out for notification of that extension, and familiarize themselves with the new provisions as part of their fiduciary responsibility.

Provisions of CARES include a Coronavirus-related distribution (CRD), adjusted plan loan limits and repayment rules, and a waiver of required minimum distributions (RMDs).

There are some caveats, however. To qualify for a CRD or a participant loan with adjusted limits, the participant must have been directly impacted by COVID-19. This means that either they or a direct family member got sick, or their job—more specifically, their pay—were impacted.

The key takeaway here is to know your team, and to call in experts when you need a second opinion. It’s easy to get stuck with the new legislation, so keep a backup team top of mind, and call for help when necessary. 

This team might include your third-party administrator, ERISA attorney, or benefits plan auditor.


The Setting Every Community Up for Retirement Enhancement Act (or SECURE Act) was passed at the end of 2019, but because it pre-dated COVID, it’s not on every plan sponsor’s radar yet—even though it should be, for this reason:

The SECURE Act included a few changes to employer-sponsored retirement plans, including provisions for long-term part-time (LTPT) employees. Although these employees will not be eligible to contribute to 401k plans until 2024, it’s important for employers to start tracking these hours now.

Implementing a system to track part-time employees’ hours of service from January 2021 forward will set you up for success over the next three years, so you can properly adhere to the new SECURE Act eligibility requirements.

Taking just a few preemptive steps now, at the end of 2020, will make your 2021 that much merrier and brighter.

From Our Homes to Yours … Happy Holidays

 I think most of us are ready to put 2020 behind us. 

As we head into what we hope is a better, more peaceful year, all of us at Cassell Plan Audits wish all of you—our clients, vendors and friends—a safe, healthy and happy holiday season. We look forward to seeing you all again next year! (Even if it’s just on the other side of a screen.)

If you’ve still got questions heading into 2021, we’ve got answers! Contact us today for more information and to schedule your virtual appointment with Cassell Plan Audits at 630.886.7669.

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