This video and blog offer insights on moves a small business owner can make to fight to survive the crippling economic impact of COVID-19. Accessing the SBA Loan known as the Paycheck Protection Program is a must for any small business in dire straits. There are additional, more immediate moves you can make to improve your cash position. The CARES Act allows for added access to retirement monies that you could consider as a last resort.
For information on the Paycheck Protection Program visit the SBA site. SBA is planning to allow for applications as early as today (Friday, April 3rd).
For details on who and how you may be able to gain early access to your retirement accounts via the CARES Act rules, please view our last blog and video.
Finally, if you do have a 401(k) plan and need to adjust, stop or suspend your employer match, here are important items to know:
- If you offer a 401(k) plan with the Safe Harbor provision, you may suspend the match. If you do so, you are still required to fund to the required amount by the end of your fiscal year.
- You could choose to remove the Safe Harbor provision altogether. This requires a 30-day notice. You may not add the Safe Harbor provision back to your plan until next year. Your plan will become subject to testing, and this can impact how much highly compensated employees may put into their personal 401(k) accounts. We do suggest discussing tactics with your provider to help ensure your plan passes testing.
- If your plan is not Safe Harbor and you are providing an employer contribution or match, you may of course lower or remove this amount. A 30-day notice is typically required. You are probably familiar with the ADP/ACP/Top Heavy tests and may need to consider additional ways to best manage and pass the tests if you make adjustments.
We hope this finds you well.