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”
With the economy still on shaky ground, many employees are understandably worried about their jobs and their finances. Unfortunately, stressing over work and money ends up being costly to our overall health. A recent study found that some types of stress are even more damaging than others, with financial stress yielding the most unhealthy dividends. Continue reading “Workplace Financial Stress: A Major Cause of Health Problems”
Winning the lottery is every worker’s dream, but for Holly in Idaho that dream is about to become her nightmare. If you haven’t heard the story, Holly recently bought a winning lottery ticket worth $190 million. Who could be more lucky? How about her estranged husband, who heard about Holly’s jackpot from a reporter. Even though they have been legally separated for years, most attorneys are saying that the continued marriage means the husband gets half the winnings. If Holly tries to fight his claim, her winnings could be tied up in court for years and unfortunately she already quit her job 6 days after the winning numbers were announced. How could this mess have been avoided? Continue reading “Financial Education: Avoiding a Mega Millions Mess”
America Saves Week 2011 is scheduled for February 20 to the 27th. What have you planned to encourage your employees to take financial action through saving, debt reduction, and wealth building?
The American Savings Education Council (ASEC) first piloted America Saves Week in 2007, with the goals of:
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”
I recently spent a few cold, snowy days meeting with employees in the Midwest counseling each of them regarding their retirement goals. I was surprised to hear quite a few employees were planning on early retirement, especially since we hear the trend is just the opposite because of our current economy. Continue reading “Financial Education in the Workplace: What a Difference a Few Years Make”
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”
The ABCs of finance includes an alphabet soup of financial jargon and lingo that can be as confusing as a foreign language for some employees. Starting with abbreviations like APR, BRIC, ETFs, FSAs, HSAs, IRAs, and ending up with terminology like zero coupon bonds, it is no wonder that many employees give up on trying to figure out how to translate their benefits and investment options. It gets really confusing for employees that have a spouse that works for a government agency or a non-profit since the spouse’s 401(k) might actually be called a 403(b) or TSA. Continue reading “Finance as a Second Language”
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”
As you open your most recent 401k statement, take a few minutes to check out a few important features of your retirement plan. What is the employer match, if any? Many companies have either reduced or eliminated the match over the past few years. At the very least, you should be contributing up to the amount your company is willing to match. But, what if you don’t have a match at all? Should you contribute to an IRA instead?
Here are some points to consider in favor of re-directing your dollars towards an IRA: Continue reading “401(k) or IRA: Which Retirement Saving Choice Is Right for You?”
Looking at my family Thanksgivings back in the day, there were usually 2 tables – you sat at the kid’s table until you graduated from high school, then you got bumped up to the adult’s table. It was considered a rite of passage and a privilege to finally be considered an adult. Continue reading “Which Table Will Your “Kids” Sit at for Thanksgiving?”
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”
Earning, Spending, Saving, Borrowing, and Protecting – these are the 5 core competencies that the Department of the Treasury’s Financial Literacy and Education Committee has proposed as what consumers should know and be able to do to successfully understand and make informed decisions about their personal finances. Each of these areas directly relate to your employees’ paychecks: Continue reading “Core Competencies for Financial Literacy”
The party is planned, the last day of work is circled on the calendar, and everyone’s happy and excited for Dave’s big day, including the financial advisor Dave met last week at a retirement planning dinner event he recently attended. It seemed like a coincidence: just when he started spreading the word of his upcoming retirement, an invitation came in the mail for a free steak dinner retirement seminar at his favorite steakhouse in town. Dave left the seminar with the message that he needed to cash in his 401(k) as soon as he retired so he could roll it to an IRA and get better investment options, higher returns, better estate planning options, and best of all, someone looking out for him to manage his money. Continue reading “Protect Your Pre-Retirees: Let Them in on Potential Red Flags for Retirement Advice”
I recently experienced my 15 minutes of fame by being featured in the October issue of SmartMoney Magazine. I was so excited to pick up the edition from the newsstand and rushed to turn to the article. The writer had sat in on a retirement education workshop I had facilitated several months ago, so I was on pins and needles to see how my knowledge and overall presentation skills would be dissected. But instead of reading about my skills, the article goes on to describe in detail the outfit I wore that day, down to the paisley print of my skirt. Continue reading “Does Style Matter?”
