FLUSHING BANK 401(k) SAVINGS PLAN
Notes to Financial Statements
AS OF AND FOR THE YEAR ENDED DECEMBER 31, 2020
In March 2020, the World Health Organization classified the COVID-19 outbreak as a pandemic, based on the rapid increase in exposure globally. This pandemic has adversely affected global economic activity and greatly contributed to significant deterioration and instability in financial markets. Because the values of the Plan’s individual investments have and will fluctuate in response to changing market conditions, the amount of losses that will be recognized in subsequent periods, if any, cannot be determined at this time. The full impact of the COVID-19 outbreak continues to evolve as of the date of this report.
Although it has not expressed any intent to do so, the Bank specifically reserves the right, at any time, to terminate the Plan or to amend, in whole or in part, any or all of the provisions of the Plan, subject to the provisions of ERISA and approval of the Bank’s Board of Directors. In the event of termination or partial termination of the Plan or upon complete discontinuance of contributions under the Plan, the accounts of each affected participant shall become 100% vested and fully distributable, in accordance with the Internal Revenue Code and all income tax regulations promulgated thereunder.
U.S. GAAP requires plan management to evaluate tax positions taken by the Plan and recognize a tax liability (or asset) if the Plan has taken an uncertain position that more likely than not would not be sustained upon examination by the Internal Revenue Service (“IRS”). The IRS has determined and informed the Bank by a signed letter dated September 28, 2016 that the Plan and related trust are designed in accordance with applicable sections of the Internal Revenue Code. Although, the Plan has since been amended since receiving the determination letter, the Plan Administrator believes the Plan is designed, and is currently being operated in compliance with the applicable requirements of the Internal Revenue Code and therefore, believe that the Plan is qualified, and the related trust is tax-exempt.
The Plan is subject to routine audits by taxing jurisdictions, however there are currently no audits in progress for any tax periods.
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Related-Party Transactions:
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Plan investments include a guaranteed income fund issued by the Prudential Retirement Insurance and Annuity Company and fifteen (15) pooled separate accounts issued by Prudential Investments. The Plan also includes the common stock of Flushing Financial Corporation, the parent company of the Bank. Accordingly, these transactions qualify as party-in-interest transactions. Notes receivable from participants also qualify as party-in-interest transactions.
At December 31, 2020, 34%, 32% and 1% of the Plan’s net assets available for benefits were invested in Flushing Financial Corporation Common Stock, funds issued by Prudential and notes receivables outstanding from participants, respectively. At December 31, 2019, 40%, 29% and 1% of the Plan’s net assets available for benefits were invested in Flushing Financial Corporation Common Stock, funds issued by Prudential and notes receivables outstanding from participants, respectively.