Payment of Benefits
Upon termination of service, a participant is entitled to receive a lump-sum amount equal to the vested balance of the participant’s account, which will be paid either as a direct rollover or directly to the participant. The Plan also allows participants to elect payment of benefits in monthly, quarterly, semiannual, or annual installments upon termination of service in lieu of a lump-sum payment. The installments shall continue pursuant to such participant’s election until the earlier of full payment of the vested amounts in the participant’s accounts or the participant’s death. Amounts remaining after the participant’s death shall be paid in a lump-sum payment to the appropriate parties under the terms of the Plan.
A participant who selects a SecurePath for Life investment option of the Plan may also elect any distribution method permitted by the variable annuity fund investment option. See Note 2 for discussion of the SecurePath for Life investment options.
Coronavirus Aid, Relief and Economic Security (“CARES”) Act
On March 27, 2020, the Coronavirus Aid, Relief and Economic Security (“CARES”) Act was signed into law. Qualified individuals are those diagnosed with COVID-19 or have a spouse or dependent who have been diagnosed, or who experience “adverse financial consequences” as a result of a quarantine, furlough, lay-off, reduction in work hours, business closure, the lack of child care, or other factors due to the COVID-19 pandemic.
Section 2202(a) of the Act allows for qualified individuals to take up to $100,000 in coronavirus-related distributions, with repayment terms of up to three years, in accordance with the CARES Act. The ability to request coronavirus related distributions under the CARES Act were from March 27, 2020 to December 31, 2020. The distributions without tax withholding made during 2020 may be returned to the Plan within three years, or if not returned, will be subject to ordinary taxation. The Plan made $7.0 million of CARES Act distributions during the year ended December 31, 2020.
Qualified individuals could also request a delay of note receivable repayments for repayments that occurred between March 27, 2020 and December 31, 2020. If a delay was granted, the participant’s note was re-amortized and included any interest accrued during the period of delay. In addition, pursuant to the CARES Act, qualified individuals who were currently receiving required minimum distributions had their 2020 payment automatically waived and participants who were due to receive the first required distribution in 2020 had their distribution automatically waived. The ability to waive a required minimum distribution and delay in note repayments and take a coronavirus-related distribution under the CARES Act ceased as of December 31, 2020.
Forfeited Accounts
Forfeited nonvested accounts reported as cash and cash equivalents in the accompanying statement of net assets available for benefits totaled $243,254 and $330,115 at December 31, 2020 and 2019, respectively. These accounts will be used to reduce future employer contributions. Forfeitures of $427,557 and $310,801 were used to reduce the Company’s 401(k) matching contributions for the 2020 and 2019 plan years, respectively.
Plan Termination
Although it has not expressed an intention to do so, any Participating Company, through action of its Board of Directors, has the right under the Plan to discontinue its contributions at any time and the Board of Directors of ArcBest Corporation, at its discretion, may terminate the Plan, subject to the provisions of ERISA. In the event of Plan termination, participants will become fully vested in their account.
Note 2:Summary of Significant Accounting Policies
Basis of Accounting
The accompanying financial statements are prepared on the accrual basis of accounting.
Use of Estimates
The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of net assets and changes in net assets and disclosure of contingent liabilities at the date of the financial statements. Actual results could differ from those estimates.