Some of your employees may have recently received a letter in the mail notifying them that they are considered an HCE – highly compensated employee. The good news is that being an HCE means a nice paycheck, since the employee would have made at least $110,000 in 2010. The bad news is that because of their HCE status, their ability to contribute to the company 401(k) may be limited. Continue reading “The Impact of Being an HCE”
Over the past several months, I have observed quite a few common misconceptions that employees have voiced while we discussed their financial situation during a worksite financial coaching session. The first, and most surprising, is how unaware employees are regarding how their benefits compare to other companies, and that many think that the grass would be greener if they switched employers for a new job offer. Simply benchmarking your level of benefits to your specific industry can be a real eye-opener for your workforce and can be easily accomplished by communicating this information during open enrollment or at a benefits planning workshop. Continue reading “Benefits Planning: Employee Misconceptions”
As if the Roth vs. pre-tax 401(k) contribution decision isn’t enough already to cause confusion for employees, now the IRS has allowed employers to offer in-plan Roth rollovers for eligible rollover distributions. As part of the Small Business Jobs Act of 2010, employees can take advantage of this opportunity for distributions made after September 27, 2010 if their employer adds the in-plan Roth rollover option through a plan amendment. Plan sponsors of a 401(k) or 403(b) were able to add the feature in late 2010, and a 457 government plan may adopt an amendment to include a designated Roth account for in-plan Roth rollovers after December 31, 2010. Continue reading “Trends in Employee Benefits: In Plan Roth Rollovers”
Now that our politicians have finally come to a decision about the new 2011 tax law, your employees have a decision of their own to make – what will they do with the 2% raise they will see in their paychecks? With the December 17th passage of the Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010, employees will only pay 4.2% towards Social Security tax in 2011, instead of the traditional 6.2%. Continue reading “Financial Education in the Workplace: The 2% Decision”
Employers may be missing a tremendous opportunity to help employees save for one of the most important, and expensive, investments they will ever make – the college education for their children. We all know that one of the biggest advantages of an employer-sponsored retirement program is the automatic payroll deduction. “Out of sight, out of mind” is what I hear consistently from employees when they think about the funds that are contributed to their 401(k) plans. Continue reading “Offering 529 Plans via Payroll as an Employee Benefit”
The first frost has hit, so that’s a reminder to me to bring out my sweaters and winter attire in preparation for the cold weather ahead. I make a habit of setting aside some of my winter clothes that no longer fit or I haven’t worn for the last few years and give them to the local Goodwill, but I have to make a detour from my normal routine to get there. Continue reading “End of Year Giving Ideas”
I recently received a call from an employee who was considering a hardship withdrawal. If you handle these requests as part of your many HR tasks, you probably see an uptick in these calls during the holiday season. Tammy, a single mom, was seeking a solution to paying off her credit card debt and felt that tapping her retirement fund could be an easy fix. Now we all know that paying off debt is not an acceptable hardship based on the IRS’s definition of an immediate and heavy financial need but many employees will simply say the money is needed for avoiding eviction or another acceptable hardship when in fact their intent is to use it to pay off credit card debt. Continue reading “The Hidden Evils of a Hardship Withdrawal”
“This year I will . . . lose weight, eat healthier, save more and spend less.” Sound familiar? We all are probably guilty of making empty promises to ourselves as we usher in the New Year. I haven’t yet discovered the magic pill for eating healthier and losing weight, since being on the road conducting workshops every week makes it a bit too tempting to eat out instead of cooking healthy. But I think I HAVE found the answer to resolving to save more and spend less without any effort. Continue reading “Escalate Your New Year’s Resolutions to Save More”
I heard a statistic the other day that the average employee spends 30 minutes choosing their benefits at open enrollment. I cringe to think how some people choose the funds in their 401(k) plans and I’ve seen the resulting disaster from people choosing the wrong funds especially funds they thought were safe and turned out to be much more aggressive than they thought. Many of these were Target Funds. Continue reading “Target Fund: Glide To or Glide Through”
Paper or plastic? Credit or debit? Common questions you hear at the grocery store, but do you consider what is the best way, credit or debit, when it comes to paying for dependent care? I don’t mean actually charging the cost to a credit card – what I am referring to is whether to take the tax credit at the end of the year on your tax return, or to have the funds withheld (debited) pre-tax from your payroll using the Dependent Care Expense Account. The best answer to this is based on what your marginal federal tax bracket is. Continue reading “Credit or Debit – Your Dependent Care Costs”
Over the weekend, like many people, I ran errands, saw dear friends, went to Mass, and watched football. What I didn’t do was study and I really needed to because I postponed my next exam for my CEBS (Certified Employee Benefits Specialist) designation for next quarter. So I better get cracking. Continue reading “An Underutilized Employee Benefit – Tuition Reimbursement”
The end of the year is drawing near, so I’ve turned up the heat on my husband to get his cracked crown replaced by our dentist. Why the rush? I know he needs some additional work done, and we have an annual maximum that we haven’t hit yet this year for restorative work. If he waits and puts it off until next year, and ends up needing something else done we will end up paying for some of the cost out of our own pocket above the annual max. Continue reading “Time Is Ticking So Take Care of Your Teeth”
In my last blog, The Little Italy of Open Enrollment, I was a hungry man staring down a street filled with masses of people and almost visible aromas and tastes of authentic Italian food. I was in search of a simple answer yet was faced with too many choices to see things clearly. For the employee receiving thick info packets during open enrollment season, there is good news. You can absolutely find what you need without your head exploding because of too many choices.
The most important thing to remember is that the choices you are faced with are about BENEFITS. Continue reading “The Little Italy of Open Enrollment”
If you are hungry for Italian food and you happen to be in New York City, a trip to Little Italy sounds logical, right? I’m a tourist in NYC, not a local, so I figured the best Italian food must be in Little Italy. When I got there, I walked along a street that was closed to traffic and on either side of the street there were restaurants filled to capacity. They all looked fabulous. As far as the eye could see there were pastas, meats, wines, lasagna, cannoli, and the smell of the food was heavenly. What happened to me in this land of abundant choice? My brain shut down. I couldn’t think. I became paralyzed by having too many choices and not enough information to process all of the choices. Suddenly, I wished I was in a small town with only 1 restaurant. Continue reading “The Little Italy of Open Enrollment”
As we head into fall, employees will face major decisions during open enrollment: which health plan to pick, adding supplemental life coverage, dental, and how much to set aside in next year’s FSA or HSA. As an HR rep, you have probably devoted a substantial amount of time to put together your benefits communications and evaluating next year’s options. But how much time do your employees dedicate to making their open enrollment decisions? Continue reading “Open Enrollment – A Month or a Minute?”
I got a call the other day on the financial helpline from an employee who is retiring next year. He had always planned on retiring in the month of June and noticed a trend this year of managers in his company retiring in August. Now this gentleman had over 35 years of service so you wouldn’t think two months would have made much difference.
So we did some digging and here is what we found. Continue reading “Retirement Decisions: What a Difference a Month Makes”
I recently sat down with an employee to create a financial plan as part of a financial coaching benefit that his employer offered as part of their overall wellness program. As we began discussing how he has his paycheck allocated, he told me about his 6% 401k deferral, his $50 HSA contribution, and his $50 a pay towards the employee stock purchase plan. His last option caught my attention because it didn’t quite fall in line with his 2 primary financial goals – retirement and saving for his son’s college costs. When I asked him why he had signed up for the ESPP, he said, “I’m buying them on sale!” since his employer gives a 5% discount to the stock price and no trading fees. Continue reading “ESPPs: A Sale to Pass On?”
As our economy gradually starts to recover, employees may start to get the itch to see if the “grass is greener on the other side” and test the waters of the employment pool. For the past few years, employees have understood why there were no pay raises, the rationale behind freezing the retirement plan match, and sometimes even a cut in hours – many have been grateful just to continue to get their paychecks. But now, is there an increase in the grumbling and are employees starting to resent what they perceive as “taking one on the chin” for their employer? Continue reading “Benchmarking: How Does Your Company Stack Up?”
Over the last few months I have talked to a lot of people who are concerned that their company’s pension plan has changed for the worse. These are people from many different employers all across the country. Many others have seen an employer’s pension plan get frozen, terminated, or taken over by the PBGC. What was just a generation ago almost a “given” has become increasingly rare, and even when it exists there is ever increasing skepticism about the long term viability of the pension plan. So, what can be done? Continue reading “When You Want Something Done Right, You May Have to Do it Yourself”
I’ve just finished filling out the application to attend the 2010 CEBS Forum, will I see you there? This year’s forum promises 3 days filled with timely and interesting topics, with healthcare reform high on the list. I will be arriving on Sunday, so that I can participate with other recent CEBS graduates at the graduation ceremony.
