Michael F. Yates & Company, Inc.
faces
HELPING MANAGE YOUR COMPANY'S MOST PRECIOUS RESOURCE
                     ...from the HR Perspective
Human Resource Update April 2009 
In This Issue
TRAVEL ALERT
HR Professionals Cautious
Federal Legislative Action Alert
Plan Related Expenses
INTERNATIONAL
TRAVEL ALERT


Cases of swine flu, which has killed people in Mexico and now in the US, have been confirmed around the world. With experts scrambling to develop a vaccine, there is concern at the potential for a pandemic affecting millions around the world.

What is swine flu?
Swine flu is a respiratory disease, caused by influenza type A which infects pigs.
There are many types, and the infection is constantly changing.
Until now it has not normally infected humans, but the latest form clearly does, and can be spread from person to person - probably through coughing and sneezing.

Several countries in Asia and Latin America have begun screening airport passengers for symptoms.
There is currently no vaccine for the new strain of flu but severe cases can be treated with antiviral medication.

A vast majority of HR Professionals are watching the second quarter closely.


Nearly three-quarters of HR professionals have some level of concern for the U.S. job market in the second quarter of this year, according to a new Labor Market Outlook survey by the Society For Human Resource Management (SHRM).

The survey found HR professionals are somewhat pessimistic about job growth in the second quarter of 2009 and anticipate increased job losses, and some are very pessimistic and expect job cuts during the quarter.
Nearly 70 percent of respondents will either eliminate jobs or keep their payrolls flat in the second quarter of 2009 (52% will maintain their staffing levels, 17% will cut jobs).
A total of 84 percent of respondents either cut jobs or kept payrolls flat in the first quarter of 2009 (45% maintained staffing levels, 39% conducted layoffs). That marked a decline in hiring activity from the fourth quarter of 2008, when 76 percent of respondents either cut jobs or kept payrolls flat (44% maintained staffing levels, 32% decreased staff).
Going forward, HR professionals are not indicating much faith in a rebound for the U.S. labor market. Only 1 percent said they were very optimistic that there will be job growth in the second quarter of 2009.
Fourteen percent said they were somewhat optimistic about increases in job growth, and another 14 percent said they were neither optimistic nor pessimistic about job growth in the second quarter.
"Economists and labor market observers have varying viewpoints as to when the labor market will start its recovery," the survey concluded.
"Most are not calling for a rebound until 2010 at the earliest, and that will depend, in part, on the effectiveness of the stimulus package approved by Congress in February."

Plan Reporting Calendar

ALL PLANS
2nd QUARTER 2009 FILING DUE DATES FOR
CALENDAR YEAR PLANS
 
This calendar is not intended to be an exhaustive listing of every due date under the Code or ERISA, but rather reflects some of the most common due dates.

View Calendar


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and firm are proud

members of the
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organizations.

Society of Actuaries 

American Society of Pension Professionals Actuaries

Society for Human Resource Management

American Management Association

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Michael F. Yates & Company, Inc.
__________
 
101 Belvidere Avenue
P.O.Box 7
Washington, NJ 07882 
 
908-689-4200

fax: 908-689-6300
 
email: [email protected]




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  • Due to the nature of the Internet, MFYCO does not warrant that access to MFYCO web sites or any of their pages will be uninterrupted or error free.
  • MFYCO does not warrant or make any representations regarding the usefulness of or the expected results of the material contained on MFYCO web sites.



Lets keep the ball rolling ! 
 
2009 so far has been a milestone year when it comes to changes to the HR environment. We will try to cover many of the vital changes and concerns in our monthly commentary.

You can view all of our newsletters by clicking the 'newsletter archives' link at our company website (www.mfyco.com).

Please feel free to comment and/or ask a question at any time. We offer this timely information as another benefit of your relationship with our company. I am humbled by your support and truly appreciate your trust and business.
 
Best Regards,
 
Michael F. Yates
President
 
Federal Legislative Action Alert

Today, the SHRM-led "HR Initiative for a Legal Workforce" coalition praised U.S. Representatives Sam Johnson (R-TX), Gabrielle Giffords (D-AZ), Paul Ryan (R-WI), Dennis Moore (D-KS), Kevin Brady (R-TX), and Harry Mitchell (D-AZ) for introducing H.R. 2028, the "New Employee Verification Act" (NEVA).

SHRM closely worked with these Members of Congress to develop NEVA.  The legislation would replace the federal government's current employee verification process with a new, easier-to-use, more reliable electronic verification system.
Associations working with SHRM on this effort include the American Council on International Personnel, Food Marketing Institute, HR Policy Association, National Association of Manufacturers, National Franchisee Association and other HR Initiative for a Legal Workforce partners.

Background
Under the bill, employers would use the state "new hire" reporting process, which is currently used for child support enforcement, to access the new system, called Electronic Employment Verification System (EEVS).  This would allow employers to confirm the work eligibility of U.S. citizens through the Social Security Administration database and that of non-citizens through the Department of Homeland Security database.
In addition, the bill also would create a voluntary biometrics option that employers could choose to use in the verification process. This system would include a standard background check and the collection of a "biometric" characteristic - such as a thumbprint - to secure an employee's identity and prevent the illegal use a Social Security number, stolen or fraudulently obtained drivers' license, or altered identification documents. To protect employers from liability, the legislation would provide employers a safe harbor.

Key provisions
  • Allows the entire attestation requirements to be done electronically as well eliminates the current Form I-9.
  • Applies only to employer's newly hired employees and would not require employers to re-verify all existing employees as is required by other bills.
  • Allows employers to check the employee through the electronic system beginning on the date of hire and ending at the end of the third business day after the employee has reported to work.
  • Provides that federal immigration law preempts any state law in regard to employer fines or sanctions for immigration-related issues or in requiring employers to verify work status or identity for work authorization purposes.
  • Requires employers to be responsible only for the hiring decisions of their own employees, not those of their subcontractors.
Click HERE for an in-depth summary of the bill's provisions.

If you have specific questions about the New Employee Verification Act, please contact Mike Aitken at [email protected], Michael Layman at [email protected] or Mike Yates at [email protected].

Recently Iowa and Vermont became the third and fourth States to legalize same-sex marriages. Massachusetts and Connecticut were the first.

The Iowa Supreme Court ruled on April 3, 2009, that the Iowa state statute limiting civil marriage to a union between a man and a woman violates the equal protection clause of Iowa Constitution. The language will be stricken from Iowa Code Sec. 595.2 and directs the remaining statutory language be interpreted and applied in a manner allowing gays and lesbians full access to the institution of civil marriage (Varnum V Brien, IowaSCt, No. 07-1499, April 3, 2009). The new statute will go in to effect 21 days later, April 24, 2009.  The Act can be found at: Click here
 
On April 7, 2009, Vermont legalized same-sex marriage, overriding a veto from Governor Jim Douglas � to make Vermont the first state to legalize same-sex marriage by statute (S.115). The law will take effect September 1, 2009. The Act can be found at:  Click here 
 

What Plan Related Expenses may be paid out of Plan Assets?
 


Although it seems logical that any costs incurred by an employer that relate to a qualified plan should be payable from the plan's assets, that is not the case.  Only certain costs associated with a qualified retirement plan, whether that plan is a defined contribution plan, such as a 401(k), a defined benefit, or a hybrid plan, can be paid with plan assets.  The determination as to whether to pay a particular expense out of plan assets is a fiduciary act governed by ERISA's fiduciary responsibility provisions.  ERISA provides that, subject to certain exceptions, the assets of an employee benefit plan shall never inure to the benefit of any employer and shall be held for the exclusive purpose of providing benefits to participants and beneficiaries and defraying reasonable expenses of administering the plan.  In discharging their duties under ERISA, fiduciaries must act prudently and solely in the interest of the plan participants and beneficiaries, and in accordance with the documents and instruments governing the plan insofar as they are consistent with the provisions of ERISA.

Whether or not a particular expense can be paid out of plan assets depends largely on two things:how the expense is categorized; and he terms (or absence of terms) regarding the payment of expenses in the plan document.
   
Expenses can be split into three broad categories:
  1. plan expenses;
  2. settlor expenses; and
  3. premium expenses.
Plan Expenses, which are costs that are reasonably related to plan administration and authorized by the plan, such as actuarial services required under ERISA can be paid for with plan assets.  Services with respect to obtaining an IRS determination letter, to amend the plan to comply with changes in the law, for routine nondiscrimination testing, to comply with ERISA disclosure requirements, and to communicate plan information to participants are also considered to be Plan Expenses and normally can be paid from the plan's assets.

Settlor Expenses, which are costs incurred for the benefit of the employer and would involve services for which an employer could reasonably be expected to bear the cost in the normal course of its business operations, such as the cost to design, establish or terminate a plan cannot be paid with plan assets.  However, reasonable expenses incurred in connection with the implementation of a settlor decision would generally be payable by the plan.  The Department of Labor has identified the following items as settler costs which cannot be paid from plan assets:
  • cost of a feasibility or plan design study for a 401(k) plan;
  • costs to establish a plan;
  • Cost of plan amendments that are not required to maintain a plan's tax qualified status;
  • fees related to an economic analysis of whether or not to terminate the plan;
  • fees for union negotiations concerning plan design and operation;
  • fees for disclosure of information that is not plan related, even if included in a document that also contains plan information;
  • fees to determine the impact of plan events on an employer's financial statements;
  •   IRS or DOL penalties;
  • union negotiations; and
  • expenses related to plan mergers or spin-offs.
Pension Benefit Guaranty Corporation (PBGC) premiums can be paid from the plan if the plan is silent or explicitly states that the plan may pay the premiums. However, the payment would be improper if the document indicates that the plan sponsor will pay them.

The Department of Labor (DOL) in Opinion Letter 2001-01A, issued January 18, 2001 recognizes that, in the context of tax-qualification activities, fiduciaries must consider whether the activities are settlor in nature for purposes of determining whether the expenses attendant thereto may be reasonable expenses of the plan.  However, in making this determination, the DOL does not believe that a fiduciary must take into account the benefit a plan's tax-qualified status confers on the employer.  Any such benefit, in the opinion of the DOL, should be viewed as an integral component of the incidental benefits that flow to plan sponsors generally by virtue of offering a plan.

In the context of tax-qualification activities, the DOL's view is that the formation of a plan as a tax-qualified plan is a settlor activity for which a plan may not pay.  But where a plan is intended to be a tax-qualified plan, implementation of this settlor decision may require plan fiduciaries to undertake activities relating to maintaining the plan's tax-qualified status for which a plan may pay reasonable expenses (i.e., reasonable in light of the services rendered).

Implementation activities might include drafting plan amendments required by changes in the tax law, nondiscrimination testing, and requesting IRS determination letters. If, on the other hand, maintaining the plan's tax-qualified status involves analysis of options for amending the plan from which the plan sponsor makes a choice, the expenses incurred in analyzing the options would be settlor expenses.

Questions concerning expenses that may properly be paid from a plan may be directed to:

Office of Regulations and Interpretations
Employee Benefits Security
Administration Room N-5669
200 Constitution Ave. Washington, DC 20210
Attention: Settlor Expense Guidance

 
about our company ...

  • Michael F. Yates & Company, Inc. can help you with a variety of services ranging from retirement plans to providing results-oriented survey instruments, training and development programs for your employees. Our products and services are intended to help you maximize the effectiveness of your Human Resources function.

  • These products and services incorporate our years of experience so that you receive rapid results and exceptional value. From onsite consulting, to strategic business integration, to Web enablement, we understand how Human Resources can be applied to solve your problems and achieve your goals. As a result, we can help you get the most out of your investment and turn your most precious resource into a competitive advantage.

  • We offer Consulting, Retirement Planning, Pension and 401(K) both qualified and non qualified Plans, Welfare Plans, Communications, Computer Systems, Executive Plans, Compensation, Mergers, Acquisitions, Divestitures and Other Services. 

    We offer a true and honest, Client Partnership.

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Michael F. Yates & Company Inc. believes strongly in protecting the privacy of its users. We collect personal information only when necessary. We do not collect any personal information about users of our web site unless it is explicitly requested via an on-line form or request.


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Did you know!
ARRA
The American Recovery and Reinvestment Act of 2009 (ARRA) provides for premium reductions and additional election opportunities for health benefits under the Consolidated Omnibus Budget Reconciliation Act of 1985, commonly called COBRA.

Eligible individuals pay only 35 percent of their COBRA premiums and the remaining 65 percent is reimbursed to the coverage provider through a tax credit. The premium reduction applies to periods of health coverage beginning on or after February 17, 2009 and lasts for up to nine months for those eligible for COBRA during the period beginning September 1, 2008 and ending December 31, 2009 due to an involuntary termination of employment that occurred during that period. The TAA Health Coverage Improvement Act of 2009, enacted as part of ARRA, also made changes with regard to COBRA continuation coverage.
 
FOR MORE INFORMATION CLICK HERE
HR Cat
Our mfyco dog has some thoughtful advice:

"Policies on computer, Internet, and e-mail usage vary widely from company to company. Some prohibit any personal use, others are quite liberal. In most cases, the company's written policies indicate whether employees can be monitored. But a recent survey found that in about 15 percent of the cases, employees were not informed that their computer, Internet or e-mail use could be monitored. "


   Michael F. Yates & Company, Inc.                       Call 908.689.4200