November 2012

Guess what? 401(k) plans that supply more money and a larger number of participants to a vendor receive certain benefits that smaller programs don’t enjoy. These might be extra services or fewer basis points in administrative costs. However, if you’re using a smaller plan, don’t fret: What you signed on for initially isn’t necessarily what you must live with forever.

A growing plan should be alert for any discounts and services for which it might be eligible once it reaches certain thresholds. Experts say that when companies get to about an average account balance of $30,000 they should start negotiating for a better deal or tell the plan provider that they’re looking for another vendor. Investment companies don’t want to lose their business.

Most providers designate certain products for specific plans. Some look at the number of participants; others consider the size of the plan portfolio. Still others use average account balance as a gauge. For example, one major fund company divides its clients into five groups based on size and offers different services for each classification, ranging from electronic 401(k) plans for the smallest group to defined benefit administration and consulting services for the largest. Another offers similar services for both small and medium-sized 401(k) plans, but charges different prices to each. As assets rise, an automatic adjustment feature decreases the charge.

The moral: Stay on top of your company’s plan and follow up with your provider once the assets reach a certain level. When negotiating for a new or updated contract, make sure that you understand the thresholds and try to have new product enhancements kick in automatically.

If the assets of your company’s plan have appreciated over time, call us for a review of the details. We’re here to help.

What are the biggest employee-related mistakes businesses are making these days? How can you defuse these potential time bombs before they explode into costly disputes? Here’s an overview of the top five employer mistakes and how to avoid them.

1. Failing to establish an effective sexual harassment policy. Recent Supreme Court decisions have held employers liable for their supervisors’ actions unless complaining employees fail to take advantage of company complaint procedures. In light of these rulings, it’s more important than ever to implement policies and procedures for dealing with sexual harassment.
2. Failing to pay overtime to nonexempt employees. All too many businesses pay employees a salary regardless of the number of hours they work and whether or not they’re subject to wage and hour laws. Unless employees are exempt as administrative, executive, or professional workers, you must pay them time-and-a-half their regular hourly pay for all hours worked in excess of 40 per week.
3. Failing to complete I-9 forms for new employees. Some employers photocopy employee-produced documents without filling out the parts of the forms that describe the documents. This can be a costly mistake if you face an audit from the U.S. Citizenship and Immigration Services (USCIS).
4. Failing to take and document disciplinary actions. Employees who have been discharged for poor performance often have glowing evaluations in their files. This can expose the employer to lawsuits.
5. Failing to discharge poor performers quickly. If you’ve retained employees for many years despite poor attendance records, multiple infractions, and even several “final” warnings in their files, you’re asking for trouble. These employees are the most likely to sue when they’re finally discharged.

It makes sense to implement these policies — and to supplement them by carrying Employment Practices Liability Insurance. Our employee benefits professionals would be happy to offer you their advice. Just give us a call.

Although many Baby Boomers have entered retirement, millions remain in the workforce and continue to be a valuable employee base that you’ll want to attract and keep. To make your benefits package appealing to this ubiquitous generation, consider these tips from a recent trade press report:

• Ask the boomers in your company what benefits they desire. Generally speaking, boomers tend to have different wants and needs than other demographic groups. Don’t assume that what works at a rival or neighbor company will work in your case; individual businesses are as different as snowflakes.
• Provide comprehensive Health insurance. Limited-benefit medical plans probably won’t appeal to boomers, because they’re generally skilled and educated workers who you’ll want to retain.
• Up the stakes on Dental plans. The boomers smiled and grooved all through the 1960s, but now they have aging teeth that they need to protect. In other words, they’ll want a dental plan with a higher maximum, even if that means paying the entire cost of coverage themselves.
• Include vision care. Yes, most boomers could see the stage perfectly from their lawn seats at the Crosby, Stills, Nash & Young concert in ’70 — but now they’ll most likely need contacts and glasses.
• Think about including Health Savings Accounts or Health Reimbursement Arrangements. HSAs and HRAs give healthy employees monetary incentive to steer away from doctors. Personal health accounts also give boomers with health problems increased control over spending on daily medical expenses.

To learn more about how to customize your benefits program for the needs of boomers, feel free to get in touch with one of our specialists.