Time to Send Safe Harbor 401(k) Notices

Plan administrators must send safe harbor notices within 90 days of the start of a new plan year, but no fewer than 30 days from the start date. For companies on calendar year basis, that time is now.

Notices must go to all employees who are eligible to participate in the plan. According to the IRS, the notice must be written in plain language and include information about:

• The safe harbor matching or non-elective formula used in the plan
• The level of matching contributions, if any; other contributions under the plan and the conditions under which they will be made
• The type and amount of compensation that may be deferred
• The method of making deferrals under the plan
• The periods available for making elections
• The withdrawal and vesting provisions applicable to contributions under the plan
• How to obtain additional information about the plan.

You can present some of this required information by cross-referencing to a summary plan description, but information on the plan’s withdrawal and vesting provisions must be spelled out in the written notice itself.

A safe harbor 401(k) plan is similar to a traditional 401(k), but can ease administration by eliminating the annual non-discrimination testing required under traditional 401(k)s. For more information on these plans, please contact us.

How Benefits Can Ease the "Talent Drain"

The retirement of our biggest generation, the Baby Boomers, has begun, and companies are already feeling the effects. That is the conclusion of a survey, conducted by Buck Consultants, World at Work and Corporate Voices for Working Families. These organizations analyzed responses from 487 organizations in a broad range of industries in a report, “The Real Talent Debate: Will Aging Boomers Deplete the Workforce?” released in June.

The extent of the problem varies by industry. Some industries—such as manufacturing and technology—view Baby Boomer retirements as less of a problem than the healthcare and oil and gas industries do, according to the survey results. Yet 42 percent of all respondents said the aging workforce is a significant issue, with half of the 42 percent saying a majority of their mature workers would be eligible to retire in the next five to 10 years. Half also said they already are suffering a shortage of skilled workers in their industry.

When it came to identifying the most significant threat, 52 percent of respondents said it was the departure of mature workers, 41 percent said it was the loss of middle management and 39 percent pointed to the exodus of technical talent and knowledgeable workers.

To slow the talent drain, companies report they are trying to hang on to their workers after they are eligible for retirement:

• 48 percent offer flexible work schedules, and another 23 percent plan to adopt them
• 42 percent are offering consulting assignments
• 47 percent are offering phased retirement, or considering it
• 43 percent are offering alternative job design, or considering it.

Another survey found that employers interested in retaining their older workers might not have problems doing so. According to researchers Sewin Chan and Ann Huff Stevens in their paper, “Is Retirement Being Remade?” fully one-third of baby boomers and other workers are returning to “some level of employment.” They found that the “partially retired” are working about 16 hours a week for 40 weeks a year in order to afford their retirement.

When ranking the factors that influenced their decision on whether/when to retire, 93 percent of respondents to the 2005/2006 MetLife Employee Benefits Trend Study ranked “financial reasons” as very significant, followed by the 80 percent who held “the need for medical/other benefits” very significant.

If you want to retain older workers, it therefore makes sense to offer benefits they are interested in. The MetLife study found that the most important benefits to mature workers relate to their financial security—including disability insurance and long-term-care insurance, along with financial planning advice and protection products. The survey found that more than half (56 percent) of older employees would like to have access to financial planners through the workplace to help them invest their 401(k) money.

How effectively your benefits are doing the job of recruiting and retaining talented workers depends on a lot of factors, including the ages, family status, education level and mobility of your workers, along with your industry and geographic region. An analysis of your benefit programs and how they stack up against your competitors’ can help you get the most from your benefit investment. For more information, please call us.

Doing Business in San Francisco

Healthy San Francisco is an innovative program designed to make healthcare services accessible and affordable to uninsured San Francisco residents. It will be administered by San Francisco Health Plan (SFHP) in partnership with the San Francisco Department of Public Health (DPH).

Of particular importance to employers are the provisions of the ordinance that establish a minimum “Health Care Expenditure” requirement effective January 1, 2008 for businesses with 50 or more employees and April 1, 2008 for those with 20 – 49 workers. Businesses with fewer than 20 employees are exempted. An employer will be subject to the plan based on total company employees, but the minimum spending requirement applies only to employees who work in San Francisco.

The Employer Health Care Expenditure Rate Schedule for 2008 and 2009 is as follows:

For more information on finding healthcare options for your employees in San Francisco, please call us.

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Benefits News Copyright Notice

Articles are provided for your personal, non-commercial use and may not be reproduced in any form. Articles are based upon analysis of information sources, necessarily condensed and, therefore, not applicable to all situations. Though we believe them to be accurate, facts and conclusions are not guaranteed. Articles are provided with the understanding that they do not constitute legal, accounting or other professional advice, which should be sought from professionals in those fields. © 2006 Thoits Insurance. All rights reserved.

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