401(k) Year-End Tips

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As the end of the year  is quickly approaching, here are some ideas that you can share with your plan sponsors of items that they should be aware of.

  • Annual notices are due at least 30 days before the plan year end.  These include Safe Harbor, QDIA, 404(c), and automatic enrollment notices
  • Add a Safe Harbor provision.  If the plan annually fails compliance testing, then a Safe Harbor plan design could be a good option.
  • Research alternative plan designs for possible tax deferral including non-qualified deferred compensation plans and cash balance plans.
  • Review the plan design for possible changes including adding a Roth option or amending your plan’s cash out provisions.
  • Make sure all Required Minimum Distributions have been processed.

– Jamie Kertis, AIF®, QKA / Retirement Plan Specialist

Jamie Kertis, AIF®, QKAjamie kertis headshot
Retirement Plan Specialist
Grinkmeyer Leonard Financial
1950 Stonegate Drive / Suite 275 /Birmingham, AL 35242
Office: 205.970.9088 / Toll-Free: 866.695.5162
www.grinkmeyerleonard.com

Contact Jamie

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Three Ways to Make Employees More Productive With Your Retirement Plan – {Anatomy of a Happy Office}

shutterstock_249108538 copyA quality retirement plan is a carrot that encourages loyalty and productivity. We talk about plans that “recruit, reward and retain” employees, but you should also consider the importance of helping an employee “retire.” The trend of baby boomers planning to stay employed to a latter age is well-documented. Although this can be beneficial, it can also mean increased costs for your company:

  •  Wages are likely on the high side of the scale for comparable positions
  •  New talent is not being developed, or is leaving for greener pastures

If you can offer an effective exit plan for the baby boomer, you help your employee and your company.  The seasoned employee is motivated to be productive, but also sees a light at the end of the employment tunnel.

A competitive retirement plan motivates younger employees as well. They see an opportunity to grow wealth within the company rather than seeking their fortune elsewhere. The golden handcuff of a long-term savings plan may give them a reason to avoid the salary chase.

An effective approach

This is an excellent environment to review and update your business’s retirement plan. While many business planning considerations may be on hold due to capital restrictions, productivity of the current workforce is paramount.  And retirement is on workers’ minds … young and old.

Cost should not be the controlling factor in reviewing the company’s plan. Effectiveness should be the target.   Keep these keys to effectiveness in mind and you’ll have a happier, more productive workforce:

1. Make it about them:  I’ve seen some retirement plan communications that read more like playbooks than explanations. While it is important that employees understand the “how” of the plan, you first have to sell the “why.”  Think of it this way: you invest dollars to set up a retirement plan, but a few cents spent in effectively communicating the plan can significantly enhance the return on your investment.

2. Offer options:   Automatic enrollment, pre-tax and post-tax features, expanded investment options – all of these give the employee an enhanced feeling of control. In an environment where so much of their retirement capital is associated with your company plan, peace of mind comes with giving the employees an enhanced say in how their money is handled.

3. Promote the hidden paycheck:  Now that you have the employee’s attention, use the company retirement plan to promote the other benefits of employment with your company.  With communication about the retirement plan, you can also change the conversation from “wages” to “pay plus.”  You can promote the company’s contribution to Social Security, the medical plan, flex time and other benefits that enhance the employee’s life.

In decades past, workers built retirement savings by paying down the mortgage balance on their home, putting money in savings bonds and building up cash values in their life insurance policies. Although it can be argued that these approaches are admirable, the reality is that not as many Americans are doing this. Instead, a sizeable chunk of a family’s retirement savings sits in their qualified plan at work. 401(k) features, such as automatic enrollment and employer match, make it increasingly easier to build up a retirement nest egg. For higher paid employees, nonqualified plans have become a key savings source, especially in a rising tax environment. The bottom line is employees are far more attentive to what retirement plans are offered through their employers.  When an employee feels like their employer has his or her best interest at heart, they are far more likely to work harder and perform better.   Add in the value of the employee not feeling as stressed about whether they will or will not be able to ever retire, the employees’ morale boost again increases work productivity which helps you the employer while benefitting your employees.

-Jamie Kertis, AIF®, QKA / Retirement Plan Specialist

*excerpts of article from Forbes.com article by Steve Parrish – “Why You Should Care About Your Employees’ Retirement Plans”


anatomy-smallAll through November, all of the advisors at our office are doing a series of articles, tips and tools and geared toward the “Anatomy of a Happy Office”.  Follow all of our blogs to read it all.
Northside of Average by Valerie Leonard
Motivated Monday by Caleb Bagwell
TAG-Living Loud by Trent Grinkmeyer

 

Jamie Kertis, AIF®, QKAjamie kertis headshot
Retirement Plan Specialist
Grinkmeyer Leonard Financial
1950 Stonegate Drive / Suite 275 /Birmingham, AL 35242
Office: 205.970.9088 / Toll-Free: 866.695.5162
www.grinkmeyerleonard.com

Contact Jamie

Follow Jamie on LinkedIn

Follow Jamie’s Blog