Small Benefit Plans

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These executive summaries were compiled from EMPLOYEE BENEFITS INFOSOURCE database, a source for information on employee benefits and human resources.

Riding the Wellness Wave: Implications for Organizations.
Cunningham, Christopher J. L.; Weathington, Bart L.; Burke, Lisa A.; Employee Benefit Plan Review; v63 no5 pp 7-9 Nov 2008; journal article

Availability : International Foundation of Employee Benefit Plans
Abstract : Organizations of all sizes have options available to promote employee wellness, and both small initiatives and expansive programs are likely to yield results. Large firms may offer a comprehensive program with special consultants, but small organizations can promote simpler strategies such as walking during breaks and nutritional information for vending machine foods. Though there is no single accepted metric for return on investment and no one best incentive for participation, various studies show positive savings from a variety of initiatives with a long term focus. Apart from individual health choices, employers should also consider the workplace from an ergonomic perspective.
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Wellness Can Be a Powerful Business Management Strategy, but It Takes Intelligent Planning and Execution.
Cooper, Meghan P.; Employee Benefit Plan Review; v63 no5 pp 10-11 Nov 2008; journal article

Availability : International Foundation of Employee Benefit Plans
Abstract : Savvy employers see employee health management not as a drag on the bottom line but a contribution to organizational productivity and success. Studies show a return on investment (ROI) of $3 to $6 for every dollar invested in helping employees change unhealthy behavior. These positive results are achievable by small organizations as well as large ones. Key for establishing credible ROI information is solid baseline data for comparison. Using consumer health education, transparent pricing, support for preventive services and other factors, organizations can gain real benefits through employee health productivity management.
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Updated Static Mortality Tables for the Years 2009 Through 2013: Notice 2008-85.
Internal Revenue Bulletin; no2008-42 pp 905-925 Oct 20, 2008; journal article

Availability : International Foundation of Employee Benefit Plans
Abstract : The IRS has published static mortality tables for use with Internal Revenue Code Section 430(h)(3)(A) and ERISA Section 303(h)(3)(A). The tables inform plans' calculation of funding targets and other items for 2009 through 2013 and apply to nondisabled participants. The IRS has also provided a modified unisex set of mortality tables to be used for establishing minimum present value of annuities starting during stability periods during the same time period, conforming with Code Section 417(e)(3) and ERISA Section 205(g)(3). The tables reflect actual and expected increases in longevity. Plan sponsors may use annually updated static mortality tables or generational tables.
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Wellness Benefits Are Expanding Into the Small Business Market.
Ripperger, Jerry L.; National Underwriter: Life & Health; v112 no38 pp 42, 44 Oct 20, 2008; journal article

Availability : International Foundation of Employee Benefit Plans
Abstract : The increasing popularity of wellness programs is driving the development of a new generation of programs. Wellness programs offered as part of health insurance packages and improvements in screening methods are allowing small employers to afford wellness programs. Providers are responding to employer demand for programs that focus on conditions prevalent in a company's employee population. Some employers are showing interest in reducing or eliminating the extra cost associated with a wellness program. Increasingly, wellness programs are being integrated into employers' overall health benefit program rather than being offered as a separate product.
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Pensions: Some Firms Don't Offer Pension Plans Because Workers Don't Want Them, ICI Says.
Wyand, Michael W.; Daily Labor Report; no193 p A5 Oct 6, 2008; journal article

Availability : International Foundation of Employee Benefit Plans
Abstract : Investment Company Institute economist Peter Brady presented research findings indicating that firms in which most employees value cash over pension savings are less likely to offer a retirement plan. Four of five workers who can and want to save for retirement have access to a plan through their own or a spouse's employer. Ninety-two percent of those with plan access actually participate. Younger and lower income workers are more likely to concentrate on saving for other purposes, while older and higher income workers are more focused on retirement planning. Employees of small firms sponsoring plans are as likely to participate as those at large firms. Participation is more related to personal attributes than firm size.
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ERISA: Ninth Court Finds No ERISA Preemption of San Francisco's Health Care Ordinance.
Pazanowski, Mary Anne; Cutler, Joyce; Daily Labor Report; no190 p AA1 Oct 1, 2008; journal article

Availability : International Foundation of Employee Benefit Plans
Abstract : According to a U.S. Ninth Circuit Court of Appeals ruling in Golden Gate Rest. Ass'n. v. San Francisco, ERISA does not preempt a San Francisco ordinance requiring medium and large employers to make minimum health care expenditures into either their own plans or a city fund on behalf of employees. The court said that the employers subject to the ordinance lacked the discretion that would make the program an ERISA plan. City officials said the ruling was a victory for the city and for uninsured Americans. Business groups said that the ruling would force small business owners out of business or prevent them from opening operations in San Francisco.
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Notice 2008-73.
Internal Revenue Bulletin; no2008-38 pp 717-718 Sep 22, 2008; journal article

Availability : International Foundation of Employee Benefit Plans
Abstract : Notice 2008-73 provides guidance on implementation of funding rules and benefit limitations created by Section 430 of the Pension Protection Act of 2006 (PPA). Under the guidance, some small pension plans are eligible for expanded transition relief. Among the issues addressed are plan valuation dates and limitations on benefit accruals and payments for defined benefit (DB) pension plans.
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The 98% Solution.
Fleet, Samuel H.; Compensation and Benefits Review; v40 no5 pp 70-74 Sep-Oct 2008; journal article

Availability : International Foundation of Employee Benefit Plans
Abstract : A large study shows that 98 percent of employees will never need more than $25,000 of health coverage in a year. The other two percent will have such high expenses that their share will be nearly 50 percent of claims paid in a year. This means that employers can offer a limited medical plan that caps coverage at $25,000 a year and eliminate half of their claim expenses. The solutions for employees who have claims over $25,000 a year include government programs and catastrophic insurance available through the employer. Depending on plan design, the first $25,000 would be paid by the limited medical plan, the employee would cover the next $50,000 and the catastrophic plan would cover expenses over $75,000.
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SIMPLE IRA Plans.
Kostrunek, Shelley; Broker World; v28 no8 pp 24, 26 Aug 2008; journal article

Availability : International Foundation of Employee Benefit Plans
Abstract : For business owners wanting to offer a cost effective retirement plan for executives and themselves, the SIMPLE IRA combined with life insurance is a good option. The SIMPLE IRA provides for current tax savings through deferred compensation and tax liability. Funds drawn tax free from the life insurance policy help cover taxes owed later. Matching contributions are tax deductible for employers, and, with simple administration, no outside help is needed for plan management. The strategy works for employers with fewer than 100 employees but may limit the amount of deferral to an amount that will not cover retirement needs. However, overfunding a life insurance policy to provide tax free withdrawals can help circumvent this situation.
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Small Businesses May Now Find Online 401(k) Plans More Feasible.
Gutrich, Mark; Benefits & Compensation Digest; v45 no8 pp 28-29, 31-32 Aug 2008; journal article

Availability : International Foundation of Employee Benefit Plans
Abstract : In the past, small business owners sometimes skipped offering 401(k) plans because they perceived the plans as too costly or cumbersome. Today, small business owners may want to be aware of technological and regulatory developments and a changing marketplace. More than 40 percent of small business owners said in a recent survey that the ability to attract and retain employees would be a major reason to offer a 401(k) plan.
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Link To Full Article
Mortality Tables for Determining Present Value: Final Regulations.
Federal Register; v73 no148 pp 44,632-44,648 Jul 31, 2008; journal article

Availability : International Foundation of Employee Benefit Plans
Abstract : The IRS has published mortality tables that, starting July 31, 2008, are to be used to determine present values and for other calculations pertaining to pension funding. They are also for use setting current liability for a multiemployer benefit plan and plans anticipating changes from the Pension Protection Act Section 412. These tables are drawn from the RP-2000 Mortality Tables Report and are the most accurate for predicting mortality of pension plan participants and beneficiaries. They make distinctions for gender and for annuitants and nonannuitants. Plan sponsors can use static mortality tables updated annually or use generational tables. Small plans can use a single blended static table for all participants.
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50 Best Small & Medium Companies to Work for in America.
Moss, Desda; Rubis, Leon; Shea, Terence F.; Zeidner, Rita; Leonard, Bill; Davis, Nancy M.; HR Magazine; v53 no7 pp 32-53 Jul 2008; journal article

Availability : International Foundation of Employee Benefit Plans
Abstract : HR Magazine has released its list of the best small- and medium-sized companies to work for in the U.S. Dixon Schwabl, an advertising, marketing and public relations firm in Victor, NY took first in the small companies list, promoting creativity and taking suggestions from employees. The best medium-sized company was Ultimate Software of Weston, FL, which offered training, advancement opportunities and a friendly corporate culture. Other leaders were Badger Mining Corp. and SnagAJob.com among small firms and Acuity and Integrity Applications Inc. among the mid-sized. Top companies all offer excellent training, benefits and communication and support their employees in traditional and innovative ways with high scores for credibility, respect, fairness, pride and camaraderie.
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The Management Team at Acquisition: Negotiating the Deal.
Bernstein, Andrew J.; Lagasse, David R.; Compensation and Benefits Review; v40 no4 pp 47-54 Jul-Aug 2008; journal article

Availability : International Foundation of Employee Benefit Plans
Abstract : In negotiating an acquisition, issues will be many, complex and critical to both the buyer and seller's team. The acquisition's management needs to deal with these issues before the transaction when the buyer understands that hard business assets are for sale, but only an agreement with management will acquire a functioning business. The acquisition's management needs to ensure it owns the same class of securities in the new venture that the buyer does and has the right to sell securities when the buyer does, with preemption rights to avoid diluting their stock holdings. Management should also insist on representation on the new board of directors in order to influence the direction of the new venture.
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The Top 10 Wellness Trends for 2008 and Beyond.
DeVries, George; Compensation and Benefits Review; v40 no4 pp 60-64 Jul-Aug 2008; journal article

Availability : International Foundation of Employee Benefit Plans
Abstract : Unsurprisingly, wellness programs for obesity and quitting smoking continue to be needed, and programs to lower stress levels are in demand. Cell phones and other wireless devices bind employees to their jobs around the clock, creating pressure and stress. Employers need to provide programs that deal with stress drivers and improve employee coping ability. By furnishing relaxation recordings, exercise at work programs, massage therapy and discounted gym memberships, employers can achieve health costs three to five times lower than those of employers without stress reduction programs. Wellness programs for seniors also need to be improved to meet the health care needs of the growing number of this population.
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You Gotta Have a Plan.
Korn, Donald Jay; Financial Planning; v39 no7 pp 55-59 Jul 2008; journal article

Availability : International Foundation of Employee Benefit Plans
Abstract : Though a small group retirement plan may not yield much profit for a financial planner, numbers of them together may, creating a valuable niche market. Referrals and connections come through individuals needing planning help, third party administrators, professional activities and creative outlets. Clients need education on the kinds of plans they can sponsor and the pros and cons of each. Beyond defined benefit and defined contribution 401(k) plans, possibilities include combinations of 401(k) and profit sharing plans, SIMPLE IRAs and simplified employee pension plans. Meetings with the sponsor and employees are important to explain choices and stimulate active engagement.
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Investments: Defined Benefit Plans Outperform 401(k)s by Average of 1 Percent, According to Study.
Ben-Yosef, Andrea L.; BNA's Pension & Benefits Reporter; v35 no25 p 1,485 Jun 24, 2008; journal article

Availability : International Foundation of Employee Benefit Plans
Abstract : A Watson Wyatt Worldwide study shows that, for 1995 to 2006, defined benefit (DB) plans fared better than 401(k) plans by one percent. Size made a difference, with large DB plans outperforming large 401(k)s by 1.21 percent, while 401(k) returns for small plans exceeded small DB plan returns by 1.03 percent. A strong market favored 401(k) plans, but DB plans survived bear markets better. In a mixed market, DB plans earned 0.3 percent more. Management fees and highly variable personal investment strategies undermine 401(k) plan returns. Larger plans are better able to afford experts to handle plan assets in a steady and unemotional way.
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Premium Protection Plans.
Bireley, Tim; Broker World; v28 no6 pp 30, 32 Jun 2008; journal article

Availability : International Foundation of Employee Benefit Plans
Abstract : With less cash reserves, it is especially important for smaller businesses to be able to predict their health care premiums in the second year. Typically, a jump in premiums has the business shopping for a new plan, which both upsets employees who may have to change practitioners and also costs the employer time. At least two insurers have developed premium protection plans which guarantee a second year single digit increase in premium costs. Employee copays and deductibles will go up, but in contributory plans employees benefit because their premium costs remain manageable.
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Quebec Groups Look to Member-Funded DB Plan.
Di Falco, George; Benefits and Pensions Monitor; v18 no4 p 11 Jun 2008; journal article

Availability : International Foundation of Employee Benefit Plans
Abstract : The member-funded pension plan (MFPP) is a different form of defined benefit (DB) plan under which employers contribute fixed amounts to cover at least half the plan costs. Employee contributions can vary, and they share the financial risk. Prompted by the Quebec Pension Board's publishing regulations, the union, FTQ, and the University of Quebec Pension Fund have established MFPPs. Small organizations especially gain from MFPPs' benefit flexibility and support of an indexing reserve when fully funded. Though employee contributions may fluctuate, the conservative benefit formula helps the plan remain reasonably stable.
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Seventh Haven.
Saxon, Stephen M.; PLANSPONSOR; v16 no3 p 89 Jun 2008; journal article

Availability : International Foundation of Employee Benefit Plans
Abstract : The DOL has proposed a regulation that clarifies the time small employers have to transmit employee contributions and loan repayments to avoid having them mixed impermissibly with plan assets. The regulation would establish a safe harbor of seven business days from when the funds would have been payable to the participant or received by the employer. This differs from the earlier, less specific requirement that funds had to be transmitted at the earliest date the funds could reasonably be segregated from general assets but no later than the 15th business day. The regulation is aimed at employers with under 100 plan participants but applies to larger plan sponsors as well.
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Slow Ride.
Moore, Rebecca; PLANSPONSOR; v16 no3 p 20 Jun 2008; journal article

Availability : International Foundation of Employee Benefit Plans
Abstract : Small corporate pension plans lag behind large plans in changing asset allocation and management to conform with updated financial accounting standards, according to Greenwich Associates. Only eight percent of small funds, having assets of $500 million or less, expect to change allocations by 2011, compared with 40 percent of the funds with over $5 billion in assets. Larger plans are shifting to international stocks and alternative investment classes, while smaller funds are more likely to stick with domestic stocks. In 2003, domestic stocks represented under 40 percent of large corporate defined benefit plans' allocations but 47.5 percent for small plans. Despite the difference, small plans had a 106 percent average funding ratio in 2005, as strong as the big corporate funds.
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Benefits Finance: Is a Self-Insured Health Plan Right for Your Company?
Edholm, Jim; Employee Benefit News; v22 no6 pp 43-44 May 2008; journal article

Availability : International Foundation of Employee Benefit Plans
Abstract : Employers wondering about whether to self insure a health plan should consider numerous questions starting with the advantages and pitfalls of self funding. Employee demographics are a key determinant, and the employer and broker must be aware of different terms and risks. Among the advantages are lower taxes and greater benefit flexibility. Self funding requires sufficient financial reserves and a solid understanding of aggregate and stop loss policy provisions, and there is no guarantee of savings every year. Small companies can self insure, and many companies not self funding would benefit from approach. A change back to traditional insurance is always available.
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Depositing 401(k) Deferrals.
Snyder, Michael B.; Journal of Compensation and Benefits; v24 no3 pp 46-47 May-Jun 2008; journal article

Availability : International Foundation of Employee Benefit Plans
Abstract : Relevant to the timing of employer's forwarding employees' pay deferrals to 401(k) plans, the DOL changed Form 5500 in such a way that penalizes employers who do not automatically deposit deferrals when generating a payroll. Many plans with under 100 participants were caught unaware, leading to a DOL safe harbor proposal allowing them seven business days to forward the contributions. In the wake of confusion prompted by this limited safe harbor, the DOL is considering expanding it to include large plans if comments on the proposal indicate strong reason to do so. This may lead to an unanticipated benefit for all sponsors given permission to retain funds for a week.
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Small-Business Owners Squeezed by Health Insurance Debate.
Opiela, Nancy; Journal of Financial Planning; v21 no5 pp 22-24, 26-28, 30, 31 May 2008; journal article

Availability : International Foundation of Employee Benefit Plans
Abstract : Small companies employing fewer than 100 workers employ 40 percent of the workforce and account for almost two thirds of uninsured workers. Change is never easy, but one way for small companies to deal with the rising costs of health care is by implementing consumer driven health plans (CDHPs) with health savings accounts (HSAs). The lower cost CDHPs shift more cost to the employees and encourage employees to be more effective health care consumers. High deductible CDHPs are not intended to cover minor claims but the serious ones that could result in a worker losing his or her home, for example.
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Small Companies Have Big Shoes to Fill.
Robbins, McLean; Employee Benefit News; v22 no5 pp 15-16 Apr 15, 2008; journal article

Availability : International Foundation of Employee Benefit Plans
Abstract : An Aberdeen Group study of small and midsize businesses reveals only 35 percent engage in succession planning. Business leaders either do not feel an urgent need or do not know how to solve their dilemmas. Succession planning involves identifying key candidates and helping them develop necessary knowledge and skills. The candidate pool should include people with skill sets drawn from various aspects of business, from within the company and outside. Individuals' key performance indicators should be tracked, updated and analyzed regularly to assess readiness to assume new responsibilities.
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Size Matters in Innovation, Study Says.
Cooper, Jay; Pensions & Investments; v36 no8 p 16 Apr 14, 2008; journal article

Availability : International Foundation of Employee Benefit Plans
Abstract : According to a 2007 Greenwich Associates survey, only eight percent of small corporate pension funds are considering significant asset allocation changes by 2010. Large corporate funds, however, are considering asset allocation changes in 40 percent of cases, while 60 percent of endowments and foundations are considering such changes by 2010. While in most cases small funds tend to follow the lead of larger funds, this does not appear to be the case when it comes to making major changes to asset allocation. Experts suggest that staffing is a likely reason for smaller plans avoiding the portfolio shifts made by larger funds and endowments.
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