Articles | April 17, 2020

Impact of Furloughs and Layoffs on Corporate DB and DC Plans

During this COVID-19 public health emergency and the accompanying financial turmoil, many employers are finding it necessary to furlough or layoff a significant number of employees. These workforce reductions can potentially have some important implications for single-employer DB and DC plans in the private sector that are often overlooked.

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The possible implications include:

  • Notices to the PBGC for some DB plans
  • Accelerated vesting due to a “partial plan termination”
  • Additional employer contributions to some DB plans (or alternative agreements with PBGC)

The rules governing these issues can be complex. Employers should work with their professional advisors to assure that there is both a common understanding of the workforce events and the implications for the retirement plans.


This information is for informational purposes only and does not constitute legal or tax advice. Plan sponsors are encouraged to discuss the issues raised here with their legal, tax and other advisors before determining how they apply to their specific situation. On all issues involving the interpretation or application of laws and regulations, you should rely solely on your legal counsel for legal advice.

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