New MFYCO
                     ...from the HR Perspective
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Human Resource UpdateJuly 2011
Greetings: 
 

Are Your Employees Targets?

 

 

 

ABC, Inc. has had to deal with the down economy. It has had to terminate employees to stay afloat. When ABC did this, it kept the most productive employees and let others go. When the time comes to hire an employee, ABC will want that new employee to be at least as productive as the employees it kept.

 

If ABC assumes that other companies have acted as they did, keeping only the best, ABC might be willing to hire only those who are currently working. Why take a chance that an unemployed individual might be one of the less efficient, or that needed skills have become rusty or out of date? Some employment ads now incorporate a phrase such as "must be currently employed" as one of the job requirements. While other ads may be silent on this matter, current employment may be seen as an indicator of a potential hire's worth. In a future article we are drafting, "Preparing for the Good Times", we will deal with this and other related issues, but let's concentrate on this issue today.

 

Ads that require current employment are more enticing to those who are currently working. One of those the ad targets could be your employee. If a vacant position is high enough on the food chain to require a head hunter, head hunters may give more weight to a candidate who is employed. One of those targeted executives could be yours. What this tells us is that we should not take our employees for granted. We should try to make our current employees feel wanted, proud of their position, and, as means permit, provide the best working conditions possible. Open communications with your employees will also help, and may alert a manager to act if he/she sees a change in the employee's attitude that could cause that employee to jump ship. Remember, training a new employee can be costly in terms of productivity and skills improvement or updating. These are important reasons to watch over your current employees and very tempting reasons to hire only those who are currently employed.

 

Does "currently employed" in an ad violate any laws? In our opinion as consultants, the unemployed are not a protected group, so it does not violate Federal law. However, it will in the State of New Jersey. Other States are considering similar laws. The Equal Employment Opportunity Commission ("EEOC") has held hearings on this matter. Most distressing is a bill that was introduced in the House by Rep. Hank Johnson (D-Ga.) that would amend the Civil Rights Act to include the unemployed as a protected group. The Fair Employment Act of 2011, still in committee, gives "unemployment status" the same weight as "race, color, religion, sex and national origin" making it illegal for employers to refuse to hire or to lower compensation based on (among other things) employment status. While the bill is extremely short, the damage it will do is immeasurably long.

  

What all of these good intentions forget is that if there are a finite number of jobs, filling a vacancy with a currently employed person creates a vacancy in another company, and so on. It becomes a game of musical jobs and finally, an unemployed person will be hired thereby obviating the need for any such law. The answer is not to prevent companies from hiring the best; it is to provide companies with the environment in which to grow so the number of jobs increases. Good intentions such as these current and proposed laws only make it harder for companies to conduct their normal business.

 

What we should do? Contact your Representative and Senators. Tell them that you need to be able to hire what you believe to be the most talented individuals you can find to keep your company afloat during these difficult times.

Senate 

House

If we can provide any additional information or assist you with your workforce planning, compensation and benefits, please call us.

 
______________________________

If you find value in this newsletter please let us know. Feel free to call me with a comment and/or ask a question at any time (908-689-4200) or send me an email ([email protected]). We offer this timely information as another benefit of your relationship with our company. If you feel a friend or colleague would benefit from receiving our newsletter, please feel free to forward a copy.
    
 

Sincerely,
   
Michael F. Yates
President

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


 

______________________________

In This Issue
MFYCO Facebook
Compensation Studies
Did you know
The Fix Is In: Common Plan Mistakes
Retirement Plan Limits
EBSA News Release
eLaws Quick Link
Plan Reporting Calendar
Track Government Spending
Business Email Etiquette
Terms of Use
 
Invitation to MFYCO Facebook
facebook 
Visit our page! 
  

 

Compensation Studies, one would think, easy, just do a web search for a title and see what 'compensation' pops up, that must be accurate and correct, right? Well, in most cases it is not the case.

 

A proper compensation study needs to incorporate competitors, neighboring businesses, industries in bordering states or cities, and a national look. The level and job responsibilities of the positions, the pay philosophy, and the size and location of the company must also be considered. The study should not be conducted on just one position, but should always incorporate benchmark positions since these positions have common responsibilities regardless of the type of business. Keep in mind, these positions are vulnerable to outside recruitment. Benchmark positions will also show if the study is skewed. When examining the positions it will become clear if pay is low, fair, or too high. If you need assistance with compensation studies please give us a call. We will be glad to assist you.

 


We invite you to share our newsletter. 
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Did you know...

The Americans with Disabilities Act (ADA) was signed into law on July 26, 1990. With new strengthening amendments passed in 2008, it continues to protect people with disabilities from discrimination in private sector employment and provides equal access to public accommodations, public services, transportation and telecommunications.



The Fix Is In: Common Plan Mistakes

Periodically the Internal Revenue Service (IRS) publishes an article that it calls "The Fix Is In: Common Plan Mistakes" that present common mistakes that happen in retirement plans.  These articles describe a common problem, how it happened, how to fix it and how to lessen the probability of the problem happening again.  Over the course of the next several months, we will be reproducing some of those articles that we believe would be helpful to you in the day-to-day administration of your plan.

Failure to Timely Start Minimum Distributions

The Issue

Internal Revenue Code (IRC) section 401(a)(9) establishes a mandatory date, known as the "required beginning date" (RBD), by which payments to a plan participant must start. A minimum payment must be made to the participant by the RBD and for each following year. A participant is not allowed to delay distribution beyond the RBD. However, participants may still have choices regarding the form of the payment as long as the form doesn't violate the law's minimum distribution requirements. Note that different plans may have different available payment methods.

Normally, the RBD for a participant who is not a 5% owner is the April 1 following the end of the calendar year in which the latter of two events occurs:

  1. The participant reaches age 70 � or
  2. The participant retires.

 

For a participant who is a 5% owner, the RBD is the April 1 following the end of the calendar year in which they attain age 70 � regardless of whether they retire by the end of that year.

Minimum distribution requirements also apply after a participant's death. When a participant dies, even if that death occurs before what would otherwise have been the participant's RBD, the law sets minimum distribution requirements on the payment of the participant's death benefit.

The Problem

Plan sponsors often discover that required minimum payments have either not been paid timely or at all. This is especially true when a non-5% owner continues working after reaching age 70 �. The minimum distribution rules are qualification requirements, meaning they must be written into the plan. Failure to follow the minimum payment rules as written in the plan document can lead to the loss of the plan's tax-qualified status. If participants or beneficiaries do not receive their minimum distribution on time, they (not the plan) are subject to a 50% additional tax on the underpayment.

 

To pay the additional tax, the participant or beneficiary must attach Form 5329 to their federal income tax return for the calendar year in which the minimum distribution was due. The IRS may waive the additional tax for reasonable cause, if reasonable steps are being taken to make up the distribution. 

 

 

The Fix 

 

 

The EPCRS Revenue Procedure (Rev. Proc. 2008-50)    is the latest update of the IRS's various resolution programs for correcting disqualifying defects in retirement plans and avoiding the tax consequences of plan disqualification. These programs are known collectively as the Employee Plans Compliance Resolution System (EPCRS). Employers may avoid disqualification of their plan by using EPCRS to correct the failures.  

 

The Self-Correction Program (SCP) or Voluntary Correction Program (VCP) can be used to correct the failures. (Note: explanations of and eligibility for these programs can be found on the Correcting Plan Errors web page .

Under the SCP, a plan sponsor may self-correct minimum required distribution errors, even where significant. The self-correction period under SCP for significant violations is two years after the plan year in which the violation occurs.

If there has been a failure to satisfy the minimum distribution requirements, the IRS will waive the 50% additional tax mentioned earlier if the plan sponsor applies for relief through VCP and requests the waiver as part of the submission. If the affected participant is an owner-employee or a 10% or more owner of a corporate plan sponsor, an explanation supporting the waiver request must be attached. If VCP isn't used to waive the additional taxes, each affected participant or beneficiary must apply for relief on an individual basis using the Form 5329 attachment to their individual federal income tax return.

Making Sure it Doesn't Happen Again

Plan sponsors should carefully monitor the age of all participants who are approaching age 70. Not making required minimum distributions can not only lead to plan disqualification, it also creates a 50% additional tax on the participant for missed distributions. Fortunately, VCP offers a course of action that can restore the qualified status of the plan and obtain waivers of the additional tax for all affected participants and beneficiaries.

 

 

 

 Page Last Reviewed or Updated (by the IRS): September 09, 2010

 

 

  

 

Call: 908-689-4200 to contact a
MFYCO professional consulting associate.
happypeople

 Retirement Plan Limits

 

 

2011

2010

2009

Maximum Annual Defined Benefit

$195,000

$195,000

$195,000

Maximum DC Annual Addition ($$)

$49,000

$49,000

$49,000

Maximum 401(k) Deferrals    

$16,500

$16,500

$16,500

Older EE Catch-Up Contribution

$5,500

$5,500

$5,500

Maximum Plan Compensation

$245,000

$245,000

$245,000

Highly Compensated Threshold

$110,000

$110,000

$110,000

Key Employee in a Top-Heavy Plan

$160,000

$160,000

$160,000

SSA Social Security Wage Base

$106,800

$106,800

$106,800

PBGC Maximum Monthly Guarantee

$4,500

$4,500

$4,500

PBGC Maximum Annual Guarantee

$54,000

$54,000

$54,000

Maximum DC Annual Addition (%)

100%

100%

100%

Social Security Tax  - Employee

Social Security Tax  - Employer

4.2%

6.2%

6.2%

6.2%

6.2%

6.2%

Medicare Tax

1.45%

1.45%

1.45%

DC Plan Deduction Limit*

25%

25%

25%

Definition of Compensation for DC   Plan Deduction Limit

Includes Deferrals

Includes Deferrals

Includes Deferrals

 

* Money purchase plans will be treated as profit-sharing plans for purposes of the IRC �404 deduction limit and

will be subject to the 25% limit. 



 What would you like to see in a future issue?

Contact our office with your suggestions.

 

 

EBSA News Release - US Department of Labor extends and aligns applicability dates for

retirement plan fee disclosure rules Effective date of service provider fee disclosure now April 1, 2012

 

WASHINGTON - The U.S. Department of Labor's Employee Benefits Security Administration has issued a final regulation under the Employee Retirement Income Security Act to extend and align the applicability dates for its retirement plan fee disclosure rules.

 

The department published an interim final regulation under ERISA Section 408(b)(2) on July 16, 2010, requiring covered service providers of retirement plans to disclose comprehensive information about their fees and potential conflicts of interest to ERISA-covered plan fiduciaries. This regulation was to become effective with respect to plan contracts or arrangements for services in existence on or after July 16, 2011. Today's final rule moves the effective date to April 1, 2012.

 

In addition, the department published a final participant-level regulation on Oct. 20, 2010, requiring that employers disclose information about plan and investment costs to workers who direct their own investments in ERISA-covered 401(k) and other individual account retirement plans. This regulation, which applies to plan years beginning on or after Nov. 1, 2011, contained a 60-day transition rule that permitted initial compliance no later than 60 days after the beginning of the first plan year on or after Nov. 1. Today's final rule retains a modified version of the 60-day transition rule that works in conjunction with the new effective date of the 408(b)(2) regulation. This linkage will ensure that the 408(b)(2) regulation becomes effective first and that all plans will be able to take advantage of the transition period following the effective date of the 408(b)(2) regulation.

 

"Employers and workers will benefit from the increased transparency provided by these fee disclosure rules," said EBSA Assistant Secretary Phyllis C. Borzi. "Extending and aligning the applicability dates of these related rules gives plan fiduciaries an appropriate amount of time to get all required fee and investment information from their covered service providers so they can then disclose, by the date required, complete and accurate information about retirement plan and investment costs to their workers."

 

Plan sponsors and service providers with questions about applicability dates or the final rule can contact Jeffrey Turner in EBSA at 202-693-8500. The Final Rule is available on EBSA's website. 

 

 
 
 
Plan Reporting Calendar
 



2011 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 


 
about MFYCO ...

  • 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.
     

Take the Michael F. Yates & Company, Inc. challenge!

Call us today ... 908-689-4200 



mh group
 How to Track Government Recovery Spending

 

"The Board shall establish and maintain...a user-friendly, public-facing website to foster greater accountability and transparency in the use of covered funds. The website...shall be a portal or gateway to key information relating to the Act and provide connections to other government websites with related information." 

 

Business Email Etiquette 

 

A company needs to implement email etiquette rules to promote professionalism, efficiency and protection from liability. Here are a few simple tools to help avoid email blunders.

1. Don't Abuse the Reply All
Only use reply all when everyone on the list of addresses requires your response. Most of the time it is sufficient to only reply to the person who sent you the email. When responding to an email, it's always a good idea to take a moment and confirm that it's only headed to your intended recipient. 

 

2. Avoid Casual Cursing
Its fine to %*@* this or $&@# that, as long as you are emailing a friend or close coworker, right? Wrong. Email is a permanent document that can always be retrieved. For people who are not familiar with your sense of humor, cursing can make you look ignorant or extremely frustrated, so keep that in mind next time your want to let off a little steam via email.

3. Watch Out for Uppercase Overkill
In email land, writing in all capital letters means YOU ARE YELLING AT SOMEONE. Unless that is what you are going for, better unclick that caps lock button. Generally, bold is used for subheads and italics are used for emphasis. To emphasize one word place *asterisks* around it instead.

4. Be Wary of Attachment Overload
The 11 photos of your new puppy you sent to your coworker won't seem as cute when they are causing her email to take 11 minutes to load, or crashing her computer completely. When in doubt, save documents in a PDF format, which will help prevent download problems. Better yet, forward them from your home address to her personal email.
 
5. No Unnecessary Use of Cuteness
If you enjoy using emoticons (smileys) and acronyms (LOL, BTW, TTYL), at least banish them from your professional correspondence. They can be distracting, confusing, or worse, make you seem more like a high schooler than a trusted colleague.

6. Signature
One thing you should be including in all your business emails: a signature that provides your full name, title, work address and phone number.

7. Use proper spelling, grammar & punctuation

This is not only important because improper spelling, grammar and punctuation give a bad impression of your company, it is also important for conveying the message properly. E-mails with no full stops or commas are difficult to read and can sometimes even change the meaning of the text. Most email programs have a spell checking option, why not use it?


8. Read the email before you send it 

A lot of people do not bother to read an email before they send it out, as can be seen from the many spelling and grammar mistakes contained in emails. Apart from this, reading your email through the eyes of the recipient will help you send a more effective message and avoid misunderstandings, inappropriate comments and confusion.


9. Add disclaimers to your emails

It is important for companies to add disclaimers to emails, since this can help protect your company from liability. Consider the following scenario: an employee accidentally forwards a virus to a customer by email. The customer decides to sue your company for damages. If you add a disclaimer at the bottom of every external mail, saying that the recipient must check each email for viruses and that it cannot be held liable for any transmitted viruses, this will surely be of help to you in court. Another example: an employee sues the company for allowing a racist email to circulate the office. If your company has an email policy in place and adds an email disclaimer to every mail that states that employees are expressly required not to make defamatory statements, you have a good case of proving that the company did everything it could to prevent offensive emails.


10. Emails are forever

Remember, emails are forever. People can print them, forward them and save them. They are personal property of the business and can be used against you. As a general rule, never put anything in an e-mail that you would not want to see on the front page of the newspaper.

 

 

Parts of this article original article appeared on Woman's Day website.Business Email Etiquette

 

 

 

 
Michael F. Yates & Company, Inc.
_________________

 
101 Belvidere Avenue
P.O.Box 7
Washington, NJ 07882-0007 
 
908-689-4200

fax: 908-689-6300

 

 
Our staff and firm are proud
members
of the following professional organizations:

Society of Actuaries
 
American Society of Pension Professionals & Actuaries

Society for Human Resource Management
  
GAPS (Global Association Pension Services)

WorldatWork

 American Management Association

 

National Federation of Independent Business

Better Business Bureau

 

 


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