Retirement Plan Sponsor’s Fiduciary Guide to Operating in a Market Meltdown

So, the events of late (i.e., Coronavirus, oil price war!) have caused quite a stir in the market to say the least. Much has been written on what investors should do, but we have not seen much on what retirement plan sponsors should do in such uncertain times.

This post is dedicated to providing guidance to plan sponsors when a market meltdown occurs. Here is a short pragmatic post with our thoughts given our 15+ years working with plan sponsors and having gone through other market meltdowns as a retirement plan advisor.

The "Guide"


Human nature is for anxiety to skyrocket when there is significant uncertainty. Employees will look to you for answers. Although you will undoubtedly not have them all, providing proactive consistent communication at a cadence that resonates with your team will go a long way to calming fears.

For guidance on this communication, turn to your third party service provider partners. That includes your retirement plan advisor, recordkeeper and TPA. If you have the right team in place, they will provide insight, guidance and best of all materials that you can use in this communication.

We will post a couple examples of employee communication that we have provided to our clients, on our letterhead, in our next post.

Leverage Your Plan Advisor

If you don’t have one, get one. According to the 2019 Fidelity “Plan Sponsor Attitudes Survey”, more than 90% of respondents have a plan advisor. Retirement plans are very specialized and you, as a fiduciary, are personally on the hook! Why chance it? Get an expert to help guide you, remove and give them some of your fiduciary risk and best of all, give them some of the work in administering your plan. No question, your employees will thank you for it.

For those of you who have an advisor already, be sure it’s one that focuses only on retirement plans (just as you wouldn’t take your loved one with a spinal cord injury to a general practitioner). This is what they do all day every day. Put your investment in the best possible resource.

This is the time for your advisor to shine. They should be communicating with you often and providing you with tools to help you navigate the rough waters such as participant communication pieces to help remind them not to make rash decisions or facilitating a committee meeting if appropriate (also see Fiduciary Duty below for other ideas).

Guidance for Plan Participants on Their Investments

Don’t do it. This can put you in a position of being a fiduciary to participants and could get you in trouble. This is what your advisor is for and another reason to hire one if you don’t have one.

Fiduciary Duty 

As long as your plan is in place, so is your fiduciary duty. Despite what is happening around you, stay calm and continue to follow your fiduciary procedures. Consider:

  • Reviewing your investment policy statement (IPS) with your advisor and ensuring that your plan's investment line up is consistent with the IPS
  • Reviewing participant fund change activity to understand if participants are moving from equities and if so, consider possibly providing participant education  
  • Ensuring your advisor and recordkeeper are doing what they agreed to be doing in their agreement

Employer Contributions

With more states issuing non-essential businesses to close, business leaders are concerned about the viability of their business. For some, the negative impact on revenues is staggering and they consequently are laying off workers. As a result, we are getting many inquiries if employer contributions to the retirement plan can be eliminated.

The good news is that are options:

  • Temporarily Cease Employer Contributions.
    • This may be a much better option and simpler. It could even be to reduce vs. to stop altogether. For non-safe harbor plans, discretionary matches can be reduced or eliminated without executing a plan amendment and can be resumed when the employer so decides. Companies non-discretionary matches (e.g., fixed match, etc.) generally have to pass a board resolution and adopt a plan amendment.
    • For safe harbor plans, it gets a bit trickier. It depends on various factors including what’s been communicated to participants in notices in the past. Bottom line, there will need to be notice to employees, an amendment will need to be executed, and non-discrimination and top heavy testing will need to be completed for the plan year, among others.
  • Plan Termination. Terminating a plan may cause issues such as requiring all participants to vest, requiring, not allowing a new plan to be put in place for at least 12 months and requiring full distribution of account balances. If the impact to the business is temporary, this may not be the best option


It is also worthy to note that if an organization lays off a significant portion of its staff, the IRS has given guidance of more than 20% among other factors, it is possible that they may treat this as a partial plan termination. In this situation, the plan continues to operate and the affected terminated participants would become 100% vested.

This guide was intended to give you some direction amidst all the uncertainty. It will be very important to seek the guidance of your ERISA attorney and plan advisor to be sure all aspects and resulting impacts of your options are discussed as it relates to your specific situation.

How We Can Help

Delegating fiduciary responsibilities can be a great solution for plan sponsors who lack time and the knowledge of ever-changing requirements to manage a retirement plan. At Stonebridge Financial Group, this is all we've done since our inception back in 2004! Our robust service offering starts with ERISA 3(21) and 3(38) services and is the tip of the iceberg. We are consultants that help you with every aspect of your plan:

  • Ensuring participant retirement readiness
  • Plan ERISA readiness
  • 1:1 and group participant education and retirement readiness meetings
  • Financial wellness
  • Committee fiduciary training
  • Process creation and documentation
  • Plan design
  • Contribution match modeling
  • Annual plan compliance review
  • And so much more

We become your outsourced retirement plan officer who dives into the morass of retirement plan details and resolves issues so you don't have to!

Please click here to schedule a short call, give us a call at (855) 530-0500 x601 or email