Extraordinary Measures

Art by Chris Buzelli

Washington produced several relief measures in late March that address the impact of COVID-19 on the economy, including the retirement industry. The Securities and Exchange Commission (SEC)’s relief package to support fund managers and investment advisers and the Coronavirus Aid, Relief and Economic Security (CARES) Act help on two fronts.

SEC Chairman Jay Clayton says the impact of the coronavirus outbreak may delay or prevent funds and advisers operating in affected areas from meeting certain regulatory obligations. This could be due to restrictions on large gatherings, travel and access to facilities; the potential limited availability of personnel; and similar disruptions. Thus, the relief package is designed to enable funds and advisers to meet those obligations and continue doing business, while recognizing that there may be temporary disruptions.

In terms of adviser-focused relief provisions, flexibility is granted for the preparation and filing of Form ADV. Further flexibility is granted for the delivery of amended brochures, brochure supplements or summaries of material service changes going to clients. The market regulator also passed rules permitting investment advisers and investment companies to conduct virtual board meetings.

Firms and financial professionals affected by the coronavirus are encouraged to contact the SEC with questions and concerns. Clayton says the commission “may extend the time period for relief, with any additional conditions it deems appropriate, or provide additional relief as circumstances warrant.”

Congress, too, has acted, taking a major step to support investors—and the broader U.S. economy—through its passage of the CARES Act. The economic stimulus package includes strategies to support individuals, families, small businesses and Fortune 500 companies alike.

On the retirement planning front, the law permits limited early withdrawals and higher loan amounts from retirement accounts. Other provisions detailed in the stimulus legislation waive required minimum distributions (RMDs) when there has been too little time to recover losses. Another allows for targeted, penalty-free access to retirement accounts for those hit directly by the health crisis.

Retirement plan experts expect that many Americans will take advantage of the relief provisions. According to new survey data provided by LendEDU, 63% of Americans are worried about negative effects on their retirement savings as a result of COVID-19, including 67% of those ages 55 and up. At the same time, 57% of Americans are worried about meeting monthly mortgage payments, including 96% of those recently unemployed. Not surprisingly, the latter group were more worried than Americans overall about keeping up with student loan payments and credit card payments: 88% vs. 63%, and 93% vs. 54%, both respectively.