Celebrate good times, come on!

A few of you are probably having wedding reception flashbacks right now, but this blog post isn’t about that kind of party – it’s about employee recognition!

Employees not only want good pay and benefits for a job well done, they would also like to feel valued and appreciated for the work they do and the milestones they accomplish.  It has even been stated that some work recognition programs help with talent attraction (recruiting) and with employee retention.  But, recognition, if anything, is a morale booster!

What kind of recognition programs are there?  Well, there are several types:

• Employee Birthdays
• Employee Anniversaries
• Personal Goal Achievements
• Department/Team Goal Achievements
• Company Achievements
• Company Milestones

Now, I could probably write PAGES on developing a good recognition program, but blogs are meant to be juicy little tastes of subject matter to incite interest and conversation…so, I won’t blabber on.  But, here are a few things you should consider about your current (or future) recognition program:

Make sure to include EVERYBODY!  Make sure that everyone from your Vice President to your newest line worker is included in any program that you offer.  Whether you decide to celebrate birthdays on their actual birth day or do a monthly party (just because it didn’t work on “The Office” doesn’t mean it won’t work in your office), make sure that everyone is recognized.  If you launching a huge sales initiative that includes recognition to your sales and marketing team, don’t forget about your staff that actually backs up that sale with the product/service.

Be sincere.  Even the best recognition program will fall to pieces and lose its potential to increase employee morale if you are not sincere in your gesture.  “Token” acknowledgements leave something to be desired.

It has to MEAN something!  If you are handing out certificates and other forms of recognition left and right, then they begin to lose their meaning.  Make sure to develop an award system that goes with the accomplishment.  If you hand out a logo’d t-shirt when someone has an anniversary but only distribute a laser-printed certificate when someone reaches a large sales milestone…it looks like there was a lack of thought to the caliber of award vs. the accomplishment.

Say it loud, say it proud!  Leaving a card and box gift on someone’s desk is no way to distribute recognition.  Present them in front of the department/team/company.  This allows co-workers to participate in the recognition of achievement or milestone as well as reinforcing to them how their good work and service will be awarded.

Random acts of recognition.  As much as people look forward to a slice of birthday cake or a company jacket when quotas are exceeded, look for opportunities to present awards or prizes when they are least expected (but earned).  As an example,  a piece of your automation hardware went down and required your employees to process jobs by hand that are normally only a push-button away, some even stayed late to make sure the products got out on time.  The next day, bring that team in a box of bagels and some juice and thank them for pulling together as a team to get the job done!

Acknowledging achievements is a small way to reap the big benefits of improved employee morale.  Whether you choose a potluck lunch, summer picnic, logo’d baseball jerseys, engraved plaques or even a pat on the back with a heartfelt “thank you”, letting your employees know that they are appreciated is sure-fire way to improve your business.

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Author:  Charmaine Hollaway, Director of Operations for PANTHEOS, recently recognized for celebrating five (5) years of service with PANTHEOS. 

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Waking up in Vegas..or Orlando…or Wisconsin Dells

…no matter where you are going to wake up, YOU NEED A VACATION!

As I get ready to cram five days of work into three days (yes…I’m going on vacation), it made me think about how the business owners and/or managers need to realize how important vacations really are FOR THEM.  Now, I’m not just saying this as I jockey the remainder of the summer schedule and pepper them with a few three-day camping weekends here and there, but I realize how none of my bosses have taken time away yet this Spring/Summer and their names aren’t on the company calendar. 

Well, I know that part of it is due to the new PANTHEOS Advantage program we are trying to get launched as well as an office move from the 2nd floor the 3rd floor of our building is anticipated for the middle of July.  But, EVERYONE needs their batteries recharged…so why is it that many business owners and entrepreneurs don’t go on vacations?

A few studys I have read this morning from sites such as Inc.com and Entrepreneur.com note reasons such as:

• “I’m too busy”
• “The office can’t survive without me”
• “The kids are too busy with their activities”
• “My spouse can’t get time off from their job”
• “We can’t afford it”

Now, all of the above seem like credible reasons….but they are really just lame excuses!  Recent studies show that vacations actually HELP your health.  Many wellness sites list statistics that vacationers actually live LONGER than those that don’t take time away from work to relax.  Some are even staggering, such as the following from Zeoscent.com:

• 32% of male vacationers are less likely to develop heart disease
• female vacationers are at 53% less heart attack risk
• non-vacationers are 8 times more like to die young
• non-vacationers 2 to 3 times more like to develop depression

What does that mean…VACATIONS HELP YOUR HEALTH!!!  And frankly, just as much as you need a break from the office…the office needs a break from YOU!

Here are some tips for taking that much-needed break:

1. Plan It!  Sit down with your family with a calendar and find the time!  Even if it’s a few long weekends here and there, you need time away from your daily activities to rest and relax as a family (and even plan a few couple-only trips!)
2. Make It Known!  Put it on the calendar at work, make sure no projects or meetings are scheduled for that time.  Put your staff and clients on notice that during that time, you will be on VACATION.  Also make sure to put the message on your Out-of-Office-Assistant on your Outlook and all your greetings on your phone/cell.
3. DO NOT give out your cell number!  Yep, DO NOT leave it in our outgoing messages or tell it to your customers.  You give your number to ONE trusted employee who will screen your messages and only contact you when it is extremely necessary (make sure to give them examples of when to call you).
4. Go Off Grid!  Resist the temptation to remain plugged into the office via cell/pad/laptop by going someone where contact with the outside world is minimum (cruises are great for this).
5. Set An Example!  Let your employees know it is okay to take time away from the office and NOT check in all the time.  It’s really not a vacation if you call them every hour or they call you.

Vacations are good for you, good for your family and even good for your employees!

The key to any successful vacation is planning.  Not only planning on where you go or what you will do, but planning to be away from the office where it doesn’t invade your every thought or strike paranoia about what is happening without you there.  But, also realize, it may take a trip of or two to actually master the ability to disconnect.  If necessary, take a few long weekends to work yourself up to the 10 day cruise around the Mediterranean!

 

 

 

 

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Author:  Charmaine Hollaway, Director of Operations for PANTHEOS

Sources and Inspiration:  Inc.com, Entrepreneur.com, Zoescent.com and my upcoming vacation when I will be away from the office without access to voicemail or e-mail messages.  If you have an immediate need, please call (877) 693-9700 and ask to be transferred to another PANTHEOS team-member that can assist you.  < see, a great example of a vacation notification message! >

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Inventive Incentives

Some companies have yet to feel the recovery hit their bottom-lines or checkbooks, but the staff is growing restless while waiting for the wage freezes to lift and they are growing weary from covering several positions when their co-workers were laid off or downsized out.  So, as a business owners, what can you do to provide an inexpensive (or free) incentive to reward your staff and improve morale?

Here are a few ideas:

Don’t skimp on the caffeine, man!  Many companies provide coffee for their staff, but may have gone to a cheaper blend or eliminated the flavored creamer to save a few bucks.  This is one place you shouldn’t skimp!  caffeine is the foundation of what many of us build our day on, and having a perfectly roasted cup of coffee at our desks flavored with the hint of vanilla cream motivates us through out the day!  Now, call that coffee service and add that gourmet blend to your next delivery!

Roll up your sleeves and get a little wet!  You want a really inexpensive incentive that will go a looong way with your staff?  Try a contest where the winner has their car washed by YOU, their boss!  Yep, get out the bucket and sponge and wash the 4-door sedan of your worker who produced the most sales, turned out the most production, filed the most records…whatever benchmark you can use to motive your workers while showing you appreciate what they do for you!  (I like lemon air freshener, please)

Bring it down!  The dress code that is!  In a few of our previous blogs, we mentioned that a casual dress code is the best FREE way to reward your workers.  I’m not saying shorts, flip-flops and tank tops – but letting your staff wear jeans and a nice shirt will actually motivate them.  They feel comfortable and are even more prone to do more hands on projects, like filing or inventory, when they don’t have to worry about their dress-clothes getting ruined.  Even consider changing your dress code to include a company logo shirt…now you add PRIDE to the mix…a win-win for you and your employees!

Open PANDORA’s Box!  Okay, not literally.  But, PANDORA is a free internet music service (or commercial free for a small fee per year) that has a long list of built radio stations according to genre or allows you to build a station around a particular band or song.  Look into this, or one of the other great internet music sites, and pump the music through the phone system, overhead speakers or computers to increase morale and your work atmosphere.

Penny Candy.  Many businesses can not afford to stock the kitchen with free munchies and soda, and employees don’t want to pump a handful of quarters into a machine for an afternoon snack.  Consider subsidized vending, where you split the cost of the items by offering them at a lower rate (like 25¢ or 50¢) and paying the difference at the end of the month.  This will also help with productivity when your employees don’t have to leave the office just to get a snack!

Brainfreeze!  By the end of the week, they start to turn to mush – so combat it with an ice-cream social where your provide a couple tubs of ice cream, toppings, whipped cream and cherries!  Maybe even rent a slushie or snow-cone machine for the afternoon, tasty and inexpensive!

What inventive incentives have you used or experienced?  Please share!

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Author:  Charmaine Hollaway, Director of Operations of PANTHEOS

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Should My Company Offer Bereavement Pay?

It’s a very delicate subject.  But, how does your company handle the situation when an employee suffers a death in the family?  Statistics show that about 90% of companies offer some type of bereavement pay.  The same stats show that the average policy is three (3) days for immediate family and one (1) day for extended.  Does your company have a written bereavement policy or is it more “case by case”?

Since I started at PANTHEOS in 2006, I have had more than my share of deaths in my family; my grandmother, two aunts, two uncles, my step-father and my father.  Some were sudden, where others were at the end of illnesses in which there was no hope.  My father was ill for a very long time and the past two years of his life were filled with many close calls.  I have to say, my bosses at PANTHEOS were so great through all these crises’ and I was able to utilize my PTO time when needed and was granted full bereavement pay when necessary.  I don’t know if I could have been any use to my family or been able to keep my own head straight if I had to worry about my job.  But…I am one of the lucky ones.

I was reading through a few of my on-line resources this morning and came across a posting in a blog called “Evil HR Lady” in which there was a posting about this subject.  Many people chimed in about experiences they had through their careers and their need for time off to deal with death and dying in their family circles.  One person even wrote about standing at her father’s funeral and her boss paying his respects but followed it up with how the work was piling up on her desk during budget time.  Was this her bosses’ inept way of dealing with the awkwardness felt when attending a funeral, or was this his real feelings about the matter?  Sad, isn’t it?

The matter of the fact is, bereavement pay is not a mandatory or a legally required offering.  Depending on your company size, FMLA may come into play depending on the circumstances, but allowing your employees either paid or non-paid leave to deal with a family loss is optional.  I’m not saying that there may not be an employee (or two) out there that always happens to have dying grandmother right around big summer weekends, but on the average, people don’t like lying about death (you know, the “karma” thing).  So, having a bereavement policy is the right thing to have.

If you offer paid leave characterized as “bereavement pay”, your policy should indicate the number of days allowed.  As mentioned before, most policies state three (3) days for immediate family (parents, siblings, grandparents, spouse, child) and one (1) day for everyone else.  The policy should also allow an employee to use up banked personal or vacation time if needed to deal with aftermath tasks.  And…allowing up to six (6) weeks of non-paid leave for an employee who suddenly loses their spouse or a child is also not uncommon.

The other thing to keep in mind in the development and enforcement of a bereavement policy is that is must be applied fair and equitably to all your employees.  If you allow one employee two weeks non-paid leave to deal with a death of a parent, you must be willing to do the same for all your employees in the same situation.

Think of yourself, as well, when putting your policy together.  How long do you think it would be before you could return to work if your teenager should suddenly pass?  I know…it’s a horrible thing to bring up, but it is the cruel harsh reality today.  No one, no law, says any time off granted must be paid time….but a bereavement policy may be written more by your heart…than your head.

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Author:  Charmaine Hollaway, Director of Operations for PANTHEOS

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What Ill’s You? A bad Sick Leave or PTO Policy!

Sick leave, sick days and personal days are forms of a benefits that many employers wrap into their compensation package.  But, many companies don’t have a written or updated policy which can lead to abuse or even accusations of discrimination.

"I can't come in to work today, Jake is sick and I need to take him to the Doctor"

A sick day is fairly self-explanatory and can be used for everything from a common cold to a more serious illness that could require hospitalization or even surgery. Personal days can cover things like the illness of a child, doctors visits, appointments for car or home repairs, etc. Most companies also allow vacation time for employees in addition to their set amount of sick leave and personal days.

Customarily, companies allocate only a certain number of days for sick leave and personal time. For example, in a calendar year an employee could have five sick days and three personal days. If the employee fails to use them all in the given amount of time, the company must decide whether to have these days as “use them or lose them” or allow employees to roll them over (add or bank them to the number of sick days for the following year). A company could also reward the employee for not taking all available sick and personal days by offering to cash them out as a bonus or offer other perks or additional vacation days.

But, this all goes back to having a sensible WRITTEN policy to follow and abide by.  Plus, many companies aren’t even aware of what they MUST give (by law) and what is voluntary.

The one law that many have heard and know about is FMLA – The Family Medical Leave Act.  This law, signed in 1993, was to help hold the jobs and benefits of employees for up to 12 weeks for the reasons of; personal illness, birth of a child, adoption of a child, illness of a child, spouse or parent, or if the employee, their child, spouse or parent are in the military under “covered active duty”.  This law only applies for employers with 50 or more employees in 20 consecutive weeks in the prior calendar year.  You can read more about FMLA at the U.S. Department of Labor website at http://www.dol.gov/whd/regs/compliance/whdfs28.htm.

But, so many businesses are under 50 employees, so are your “required” to have a sick leave policy?  Well, no, but many business put together a mini-medical leave policy that uses the same guidelines as FMLA with a shorter “protection” time.  The main idea, though, is to make sure that if you do decide to have a sick leave policy is to have it WRITTEN and EQUITABLY AWARDED.

I guess I can’t drive it home enough, having it in writing is your best defense against abuse or misinterpretation.  When PANTHEOS works with our clients in the creation and administration of their Employee Guidebook, sick leave and PTO is one section that gets a little more consideration (along with vacation and holidays).  Also, we couldn’t even begin to count how many calls we take from employees and managers requesting FMLA packets when the company they work for only has 17 employees and doesn’t even offer a mini-med leave program.

This blog could go on and on about other factors with sick leave, sick days and PTO like: abuse, reporting, tracking, etc.  Guess that can be a blog for another time!  Right now, I feel the sniffles coming on….

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Author:  Charmaine Hollaway, Director or Operations for PANTHEOS

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The PANTHEOS Group is a full service professional employer organization (PEO) providing human resources, payroll, benefits, risk and safety administration and workers compensation in the Chicagoland area and surrounding states.  Tier pricing allows clients to choose the services they need making PANTHEOS a preferred choice for start-ups and small to medium businesses.  Contact the PANTHEOS Business Development team at (877) 693-9700 to find out more about PANTHEOS and our service offerings.

Well, isn’t this FUN?

For those of you small to medium businesses who haven’t added a new employee to your health plan yet this year…be prepared!  If you are an Illinois employer, you will have a rude awakening to the new form needed to enroll a participant!

The main carriers that we work with, BCBS and Humana, have already adopted the use of the “Illinois Standard Health Employee Application for Small Employers”.  But wait…there is more…they have a HMO and PPO version!  This ten (10) page document is one of the most cumbersome things I have seen in a long time, and I used to complete credentialing applications for healthcare providers!

Page one (1) of the new ten (10) page health insurance application!

This new app is just chock full of….fodder!  Yep, most of it is left blank when an employee completes it.  If someone is waiving coverage, they only complete 3 of the 10 pages!  If they are not enrolling dependents, that page out.  If they don’t answer “yes” to any medical questions, that is a page out.  So, by the time someone completes the “packet”, only 3 or 4 pages actually have data on them.  Oh…and don’t forget to sign page 10!

Here is a little perspective:  The BCBS form used to be three (3) pages long, the Humana form was five(5).  What else does this mean:  More data to protect and more paper to store.  Fun, huh?

So, why the new form?  Why sooooo many pages?  Well, you can thank a couple of laws at the federal and state level for that.  The Healthcare Reform Act has made carriers want more specific information, while the Illinois Civil Union passage will now grant equal coverage and offerings to same-sex couples.  These new forms cover it all!

So, Illinois employers, toss out those old hard copies of your applications and erase them from your networks and websites…there is a new “Sheriff” in town and he now requires this ten page application!  Oh, and don’t waste your time submitting the old form for a new participant…they will just send it back requesting the “correct” form.

Contact your Agent/Broker, TPA or friendly neighborhood PANTHEOS Benefit Manager to provide you and your group the forms you need.

Good Luck!

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Author:  Charmaine Hollaway, Director of Operations for PANTHEOS

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Your Benefit Renewal, Things to Consider

Okay, the jack-o-latern just made it out to the curb for garbage pick-up and you can’t go into any store right now and not see a full-blown Christmas display (um, did I miss Thanksgiving?).  These are signs that we are in the last couple months of the year and for many businesses, this means it’s renewal time for their benefit plans and open enrollment.

As tweeted yesterday, insurance companies are hitting companies with double-digit increases, mainly derived from the additional costs they anticipate with complying with the new Health Care Reform Act.  Even though more small businesses started offering insurance because of tax credits allowed to them, premium increases may make them re-think their offerings.

Renewal time is the opportunity you, the business owner, have to make adjustments to your benefits that will help offset some of the increases.  Here are a few things to consider:

1. Raising the deductible.  Even just bumping up the deductible a little may bring down your base premium, plus this only affects those participants that utilize the program.  If you have a young, healthy employee base, this a great way to keep premiums low.
2. Raising the co-pay.  Again, this only affects those participants who utilize the plan.  You can even keep the office co-pay low, but increase the co-pay for specialists and emergency room visits.
3. Raising the drug card co-pay.  Raising the generic co-pay $5 may not change your base premium rate, but increasing the co-pay on tier 3 medications (no generic, usually very expensive) to amounts between $60 and $100 will.  These medications usually cost several hundred dollars per month, so a $100 co-pay is still a lot less for the participant.
4. Consider alternative plans.  If you only offer a PPO plan with a small deductible, consider adding or changing to a high-deductible plan with an HSA or even offering an HMO plan – both offer lower base premiums.
5. Consider your contribution.  If your company pays 100% of the coverage, your plan will require that all eligible employees be enrolled.  That means if you have an employee that would qualify for coverage under their spouse’s plan, they still have to be on yours!  This means you are spending money on someone who really doesn’t need your insurance.  Also, if your company pays 100% of the participants election, whether they select employee only or family coverage, consider having your employee contribute towards their dependent costs.
6. Add a Wellness Program.  Many carriers will discount your premium if your company utilizes a wellness program.  These programs have proven to help reduce utilization of a healthcare program which in turns leads to less claims the carrier will have to pay.
7. Consider individual policies.  It is hard to believe, but sometimes it is less expensive for an employee to have their own policy than it is to have a group policy.  From my own experience, it is less expensive for me to have an employee+spouse coverage through PANTHEOS, but pay for an individual policy for our son.  I couldn’t see paying high “family rates” that are priced to offset the cost of covering five individuals for my little family of three.  This tactic saves me nearly $400 per month!  This same strategy may work for many of your employees with small families.

With any changes you make to your benefit offerings, make sure that it is communicated to all your employees.  Renewal and open enrollment is the only opportunity (outside of a life event) in which employees can change, add or drop coverage.  Failing to let them know that they have options for consideration could cause you and your employee headaches for the next plan year.

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Author:  Charmaine Hollaway, Director of Operations for PANTHEOS

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2011 HCRA Effects on FSA’s

Well, November is now only days away and many companies are ready to embark on their open enrollment season for their benefits, PANTHEOS included.

One benefit requires re-enrollment each plan year, and that is a FSA (flexible spending account).  So, even though an employee may enroll in the program for 2010, they must re-elect for 2011.

But wait…there is a BIG change for 2011!

The recent passage of the Health Care Reform Act has new laws that limit medical flexible spending accounts.  Starting on 1/1/11, you can no longer use your flex funds to purchase over-the-counter (OTC) medication.  This is a huge blow to those participants with chronic conditions in which their medication used to be by prescription only but have recently become available as OTC’s (Claritin, Prilosec, Zyrtec, etc.).  But, if you have a prescription from your physician for those OTC  meds, you can continue to use your flex funds.

Just some of the OTC items you will no longer be able to puchase with flex funds as of 1/1/11

This is still disheartening to those participants with children.  They have been able to take care of purchasing first aid items (you know how many band-aids kids go through) and cold/flu medicine using their pre-tax dollars.  It’s been a great advantage to practically save 30% on everything you buy that you need to run a healthy household.

So, WHY?  Why would HCRA care about FSA’s?  Well, the perception is that now that everyone will have access to healthcare which provides preventative maintenance, there won’t be as much need for OTC products.  I’m not saying that makes sense, it’s just a perception of the lawmakers.

Advice?  Well, if you have ANY funds left in your medical FSA account for 2010, it is strongly suggested you stock up on your OTC medication (pay attention to those expiration dates) and re-evaluate the amount of your election for 2011.

And, not to make your day any worse….on 1/1/13, medical flexible spending accounts limits will be decreased from $5000 per plan year to $2500 per plan year.  So, if your kids need orthodontia that you will have to pay out-of-pocket for….you may look into getting those put on within the next two years.

One thing to keep in mind, as lawmakers currently in office and those soon to be elected get together, the sense is that many parts (or the whole law itself) of HCRA will be brought into court and may be overturned.  PANTHEOS will keep you posted on any developments and how they will affect benefit offerings.

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Author:  Charmaine Hollaway, Director of Operations of PANTHEOS

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Do PT’s get OT?

The part-time employee population has grown recently with increases anticipanted  in the next few years as companies try to deal with the new laws and expense regarding healthcare reform.  Many employers have a false belief that just because an employee is designated as “part-time”, they are exempt from overtime pay and benefits.

Each state has their own rules about part-time employees and how they are handled for overtime pay and other things like benefits, medical leave, retirement plans and paid-time off.  Knowing the specifics about your state’s rules is imperative in avoiding costly audits, fines and penalties.

Some states, such as California and Colorado, have daily overtime rules.  So, if you have an employee that comes in and works 9 hours in one day and that is the only day they work for you, they actually get overtime pay for that last hour worked and must have a meal break.  If your state has the “physical hours worked over 40 hours per week” as its qualifier for over-time pay, you may be safe..but be careful if that part-time employee ever works more hours for special projects or covering for other employees!

Federal laws, such as the Family Medical Leave Act (FMLA) are applicable to employees that work 1,250 hours in a 12 month period, that comes out to 24 hours per week.  Many employees use a target of “under 30 hours per week” as an indicator of part-time status, but these employees would still be eligible to take a medical leave under FMLA.

Also, review your retirement plan documents closely.  Denying particiation to part-time employees based on their hours worked per week may violate your plan rules and throw it out of compliance.

Another important detail to not forget is the language in your employee handbook’/guidebook.  Make sure to address your part-time employee pool by outlining pro-rata awarding of personal time off, bonuses and benefits.  As example, if your company accrues 5 hours per pay period towards vacation for your employees that work 40 hours per week, those employees that work 20 hours per week would accrue 2.5 hours per pay period.  Try to avoid using language like “one weeks vacation per year for part-time employees”, especially if you have employees that only work a day or two for your organization.

Even if you don’t consider part-time employees “regular employees”, remember…the law does!

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Author:  Charmaine Hollaway, Director of Operations of PANTHEOS

Source:  Inc.com “Does Your Part-Time Employees Qualify for Overtime?”, Courtney Rubin

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Should My Business Offer a 401(k) Plan?

Looking out for your employees future is just good business!  One way to do this is to provide a 401k plan which will allow them options for saving for their retirements.  Whether your company chooses to match or contribute to the plan is a separate subject, this blog is strictly about why your company should consider providing access to a plan.

PANTHEOS provides a 401k plan to each and every one of our clients.  Our plan is what is called a “MEP”, or multi-employer plan.  It allows each of our clients to adopt their own plan under our master program and choose their own eligibility, vesting and contribution rates.  By using the PANTHEOS plan, our clients can have all the benefits of a retirement program without ANY of the cost of administrative burden.

But enough about us….why should YOU, the entrepreneur, the small/medium business owner have a 401k plan? Employers start a 401(k) for a host of reasons.

• A well-designed 401(k) plan can help attract and keep talented employees.
• It allows participants to decide how much to contribute to their accounts on a before-tax basis.
• Employers are entitled to a tax deduction for their contributions to employees’ accounts.
• A 401(k) plan benefits a mix of rank-and-file employees and owner/managers.
• The money contributed may grow through investments in stocks, mutual funds, money market funds, savings accounts, and other investment vehicles.
• Contributions and earnings generally are not taxed by the Federal government or by most State governments until they are distributed.
• A 401(k) plan may allow participants to take their benefits with them when they leave the company, easing administrative burdens.

I asked our trusted advisor, Mary Randel, of Transamerica Retirement Services, to provide some information regarding the biggest “FAQ’s” that employers have when thinking about providing a 401k plan.  She was kind enough (and she is ALWAYS kind!) to provide this:

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A Q&A on Offering a 401(k) Plan

 For hard-working Americans whose companies do not offer a retirement plan, retirement income will likely come from sources such as Social Security, which typically only covers about 37% of an average retiree’s income, and personal savings and investments.¹

According to the Eleventh Annual Transamerica Retirement Survey,² only 81% of small business employers, with 10-499 employees, reported that they provide a 401(k) or other retirement savings plan for their employees, compared to 92% of large employers, with greater than 500 employees. There are many reasons for the disparity: a lack of financial or administrative resources, a sense that the company is too small to offer a plan, company management is not interested, concerns about cost, concerns about fiduciary liability, and administrative complexity.

Many small-business owners may be intimidated by the prospect of offering a retirement plan and might have questions. The following question and answer section may help put business owners at ease by offering them a clearer view of the benefits of offering a 401(k) retirement plan; in particular, the advantages of sponsoring a retirement plan under a Multiple Employer Plan are addressed.

Q. Is offering a retirement plan expensive?

A. With today’s Multiple Employer Plans (MEPs), small businesses may receive the economies of scale that have generally been reserved for large businesses. A Multiple Employer Plan, also referred to as an MEP, is a retirement plan for businesses that typically have a common interest, but that are not commonly owned or affiliated. These businesses are referred to as “Adopting Employers” when they elect to join the MEP. These plans can be defined contribution (DC) or defined benefit (DB) plans.

The chief advantages of sponsoring a retirement plan under an MEP are the savings in administrative costs and burdens. The MEP Sponsor is responsible for the administration, and the Adopting Employer does not need to be bothered with it. An MEP files a single 5500, so the costs of preparing that 5500, as well as other plan related costs, such as legally required amendments, can be spread over all the Adopting Employers. This may result in major savings to the MEP Sponsor and all Adopting Employers compared to the costs of maintaining a standalone plan.

Q. What are the tax benefits of offering a 401(k) retirement plan?

A. Employer contributions are typically deductible on the Adopting Employer’s federal income tax return to the extent that the contributions do not exceed the limitations described in the Internal Revenue Code (IRC). In addition, contributions have to be made in accordance with the terms of the plan and must meet other IRS requirements. Refer to the Retirement Plans for Small Business Publication 560 at http://www.irs.gov/pub/irs-pdf/p560.pdf for more information about deduction limitations.

Q. How important is a 401(k) retirement plan to my employees?

A.  Employees find retirement plans extremely valuable, and to drive this point home, here are a few statistics. According to the results from the Eleventh Annual Transamerica Retirement Survey:²

• 64% of employees whose employer doesn’t offer a retirement plan said they would likely leave their current job for a company that offered one.
• 47% of employees said they’d prefer a job with excellent retirement benefits over a higher salary.
• 90% of employees said it is important that a company offer a 401(k) plan or other employee self-funded plan.

Q. I have a small business, how can I possibly handle the administration and paperwork involved with offering a 401(k) retirement plan?

A. By participating in a Multiple Employer 401(k) Plan with a quality provider, virtually all retirement plan administrative tasks can be offloaded to the MEP Sponsor. Tasks that can be shifted may include: distribution processing, due diligence duties, plan compliance, nondiscrimination testing, annual reporting, participant education and enrollment, and participant assistance.    

There are many other benefits of offering a retirement plan to your employees, speak with PANTHEOS today for more information about this and the MANY benefits of outsourcing employer liabilities, benefits, procedures and headaches!

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Author:  Charmaine Hollaway, Director of Operations of PANTHEOS (877) 693-9700

Source:  Tranamerica Retirement Services, “A Q&A on Offering a 401(k) Plan” provided by Mary Randel, Sr. Client Relationship and Development Manager of MEP Services

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Now all the “stuff” on the bottom of the source article from Transamerica:

Transamerica Financial Life Insurance Company is an affiliate of Diversified Investors Securities Corp.

Transamerica Retirement Services and its representatives cannot give ERISA, tax, or legal advice. This material is provided for informational purposes only based on our understanding of material provided and should not be construed as ERISA, tax, or legal advice. Clients and other interested parties must consult and rely solely upon their own independent advisors regarding their particular situation and the concepts presented here. Although care has been taken in preparing this material and presenting it accurately, Transamerica Retirement Services disclaims any express or implied warranty as to the accuracy of any material contained herein and any liability with respect to it.

Transamerica Retirement Services (“Transamerica”), a marketing unit of Transamerica Financial Life Insurance Company (“TFLIC”), 440 Mamaroneck Avenue, Harrison, New York 10528, and other of its affiliates, specializes in the promotion of retirement plan products and services. TFLIC is not authorized and does not do business in the following jurisdictions: Guam, Puerto Rico, and the U.S. Virgin Islands.

Transamerica Retirement Services and its representatives cannot give ERISA, tax or legal advice. This material is provided for informational purposes only based on our understanding of material provided and should not be construed as ERISA, tax or legal advice. Clients and other interested parties must consult and rely solely upon their own independent advisers regarding their particular situation and the concepts presented here. Although care has been taken in preparing this material and presenting it accurately, Transamerica Retirement Services disclaims any express or implied warranty as to the accuracy of any material contained herein and any liability with respect to it.

1Social Security Administration, Fact Sheet Social Security: 2008 Social Security Changes.

2A survey was conducted online within the United States by Harris Interactive on behalf of Transamerica Center for Retirement Studies between December 3, 2009 and January 18, 2010 among 3,598 full-time and part-time workers. Potential respondents were targeted based on job title and fulltime and part-time status. Respondents met the following criteria: All U.S. residents, age 18 or older, full-time workers or part-time workers in for profit companies, and employer size of 10 or more. Results were weighted as needed for the number of employees at companies in each employee size range. No estimates of theoretical sampling error can be calculated; a full methodology is available.

About Harris Interactive: Harris Interactive is one of the world’s leading custom market research firms, leveraging research, technology, and business acumen to transform relevant insight into actionable foresight. Known widely for the Harris Poll and for pioneering innovative research methodologies, Harris offers expertise in a wide range of industries including healthcare, technology, public affairs, energy, telecommunications, financial services, insurance, media, retail, restaurant, and consumer package goods. Serving clients in over 215 countries and territories through our North American, European, and Asian offices and a network of independent market research firms, Harris specializes in delivering research solutions that help us—and our clients—stay ahead of what’s next. For more information, please visit www.harrisinteractive.com.

The Transamerica Center for Retirement Studies® (“The Center”) is a non-profit corporation and private foundation. The Center is funded by contributions from Transamerica Life Insurance Company and its affiliates or other unaffiliated third-parties. The Center is not affiliated with Harris Interactive. For more information about The Center, please refer to www.transamericacenter.org