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Benefitting You!
December, 2011 |
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Upcoming Events | |
Please join us at our next
Human Resource Roundtable Breakfast
on January 19, 2012
from 8:00 a.m. - 10:00 a.m.
Elise Feldman
President
Feldman Benefit Services, Inc.
discusses
"How to Use Benefits Programs to Incentivize Employees"
CPE is available
RSVP today by contacting Sally Glick at (973) 994-9494 or sally.glick@sobel-cpa.com.
Click here to view invitation. |
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Greetings! |
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Ken Bagner
CPA, MST |
Happy Holidays! We hope you enjoy the December issue of Benefitting You!
Please join us at our Quarterly Roundtable on January 19, 2012. The topic is "How to Use Benefits Programs to Incentivize Employees." Our presenter will be Elise Feldman, President of Feldman Benefit Services, Inc.
We hope you will find the articles included here to be valuable, and that you will pass this along to others. You are always welcome to provide topics of interest that you would like covered in future issues.
I look forward to hearing from you .
Enjoy!
Ken
Ken Bagner, CPA, MST
Member of the Firm
Director, Employee Benefit Plan Audit Practice
P.S. If you want to add anyone else to the e-newsletter mailing list, please just send their contact information to sally.glick@sobel-cpa.com and we will see that they are included going forward.
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Key Challenges and Implications for Plan Administrators
Written by Anthony Rajkumar
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Plan Administrators are expected to act in a trustworthy manner. Administrators are held to higher standards, exhibiting values of integrity and honesty, and adhering to these principles specifically because they have responsibility for acting on behalf of participants in a retirement plan and their beneficiaries. In this role they are required to put the goals and objectives of the Plan participants ahead of other considerations.
There are three integrated 'categories' that all Plan Administrators need to address in order to adequately perform their duties. These are: identifying and avoiding Plan deficiencies, understanding and upholding all fiduciary duties; and being vigilant regarding fair fees. It is important for Plan Administrators, not only to define their most significant responsibilities, but to also understand the resulting implications of their actions or inactions.
We will cover each one of these three categories over the next few months, beginning with Identifying Plan Deficiencies.
Identifying Plan Deficiencies
The Administrator of a Retirement Plan must provide the necessary oversight to ensure that the Plan doesn't exhibit any of the most common deficiencies, which may include (1) not being in compliance with recent changes in the law, (2) not operating in accordance with the Plan document, (3) not following the Plan's definition of compensation, (4) not providing the correct matching contributions to all appropriate participants, (5) not making timely deposits of elective deferrals, (6) not filing Form 5500 in a timely fashion, (7) not distributing a summary annual report yearly to all participants and (8) not providing notices of safe harbor plans. Administrators have an obligation to keep the Plan compliant and to avoid the consequences that can occur when a Plan suffers from any of these deficiencies.
Implications
When a Plan is not being administered properly, it will get the attention of the Deportment of Labor (DOL) or the Internal Revenue Service (IRS) and perhaps undergo even more close scrutiny, which can result in losing its tax exempt status, assessment of fines and penalties, facing legal challenges, lawsuits and sanctions from DOL, and enduring a serious loss of credibility with employees.
Solutions
To avoid this situation and ensure that you minimize the chances for Plan deficiencies, here are some suggestions that may be applicable to your situation:
- Maintain proper documentation for any changes regarding the plan, including providing formal minutes of actions taken by the trustees of the Plan.
- Develop and execute policies and procedures to ensure that any ineligible employees are not included as participants in the Plan until they meet the eligibility requirements.
- Create a policy for reviewing and authorizing Plan documents and amendments on a quarterly basis.
- Perform an internal review of the operations in the Plan. Spot check employee and employer contributions during the year to ensure the Plan Document is being followed appropriately.
- Review remittances into the Plan to ensure they are being deposited in a consistent and timely fashion.
Conclusion
Plan Administrators take on their role with an understanding of their responsibilities to the Plan, the participants and the beneficiaries. Functioning almost like a "watchdog," they protect the assets, communicate information and ensure that the Plan is followed. In doing so, it is important to be educated regarding the potential pitfalls and how to avoid them.
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From a Human Resource Perspective......
Holiday Cheer Can Lead to Holiday Challenges
Written by Molly Lockwood |
 The approaching holiday season, and its myriad of office parties, all too often creates a complicated set of circumstances that cause major headaches for business owners, senior managers and human resource directors across companies of any size.
There are several scenarios that can arise from too much holiday cheer.
Alcohol and Holiday Parties Don't Mix
One of the most obvious problems involves the mix of food, alcohol and a carefree party atmosphere combined with wintry weather conditions that can result in a perfect storm leading to tragic circumstances.
For most, a party isn't complete without wine, beer or mixed drinks to provide a festive atmosphere. But employers must be educated regarding their legal vulnerability if an impaired employee causes an injury after leaving the company sponsored holiday celebration. To avoid potential problems and to ensure that everyone has a good time while remaining safe to drive home, make sure employees know when to stop. Have designated party watchdogs who gently enforce the company policy regarding consumption for anyone who is abusing the rules; have alternative transportation available and don't allow anyone to drive if they are under the influence; close the bar at least 30-45 minutes before the party ends to give people a chance to recover and regroup before setting out on the road.
Holiday Parties May Encourage Inappropriate Behavior
It is a good idea to address a range of behaviors that are deemed harassment, or are seen as simply unacceptable, even before the party begins. Discuss your dress and behavior polices with all employees so they know what is expected and therefore they can conduct themselves properly. After all, being at a party and getting drunk isn't a reasonable defense for being obnoxious! In fact, every company should be mindful of the influence that too much drinking can have on aggressive teasing, bullying or sexual advances. The company has an obligation to enact a code of conduct that includes behaving in a responsible fashion.
Keep the Holiday Frenzy Out of the Holiday
While all the drinking, eating and gift buying can be stressful, this is also the season for giving, caring and sharing - and it is up to the human resource director, in tandem with the business owner, to establish a holiday-like atmosphere of good will and good judgment.
The packages of candy and cookies that are sent by well intentioned vendors and customers cause their own set of issues. Just think about the ingredients that are a part of every batch of cookies, holiday cakes and pies and of course, the sugar plums! Eating all that sugar in a short span of a few weeks can make anyone sluggish and uncomfortable. Perhaps as an alternative, some can be frozen for use at a later date, just to spread out the calories a bit and avoid a feeding frenzy with every new delivery.
Gift giving, even shopping for a company grab bag and being asked to support company sponsored charitable activities, can strain some purses, while others are offended by the religious overtones of a holiday that appears to have universal commercial appeal but which may not be universally celebrated by all.
Survive and Enjoy the Holidays!
The bottom line for human resource directors is to help guide their companies in adopting a realistic and practical approach that includes drafting company holiday season guidelines that set down parameters and are sensitive to the diverse reactions which can occur during the holidays.
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Are You a Fiduciary?
Written by Richard Rowehl, AIF®, Executive Director, Retirement Services Department
with Oppenheimer & Co. Inc. | |
 If you've been asked to be part of the committee that oversees your company's 401(k) plan, are you in danger of being personally sued in the event that the market crashes? Are you at the mercy of fiduciary liability for things in the plan that you cannot control? It's possible.
When the Sarbanes-Oxley Act was passed on July 30, 2002, the end result was that there were now more ways in which to personally punish those fiduciaries who did not uphold their fiduciary duty. The actual duties have not changed. So first you must ask yourself: Am I a fiduciary? According to the IRS, you are a fiduciary if you:
- Have discretionary authority or control over purchasing or selling securities for the plan;
- Give any advice to the plan for compensation; or
- Have any responsibility for administering the plan.
You can be a fiduciary of the plan, no matter what your job title is, if you fulfill any of the requirements in the previous paragraph. And as a fiduciary, you are personally liable for any losses to a plan that result from imprudent behavior.
Only by educating yourself and asking pertinent questions can you avoid an accidental breach of fiduciary duty.
Ask Questions
Before you accept any role, formal or informal, in the administration of a 401(k) plan, you will need to know some basics. Here are some of the questions you might want to ask:
- What type of plan will be administered?
- Who are the other fiduciaries (internal and external) for the plan?
- What are the responsibilities with respect to the plan?
Ways to Limit Fiduciary Responsibility
According to Employee Benefits News, a plan sponsor can limit liability for its internal fiduciaries by indemnification and insurance policies. However, if the plan sponsor goes bankrupt or if a fiduciary is charged with gross negligence or bad faith, it may be difficult to enforce indemnification. A plan sponsor may also protect internal fiduciaries by purchasing fiduciary insurance, which can be expensive. It's also important to make sure the plan covers all fiduciaries and has a high enough dollar limit. Insurance law and tax law can be complicated in these sorts of matters, so it's important that you contact legal counsel before you make any decisions regarding the purchase of plan-related insurance.
You should seek to work with providers or consultants that help you more effectively carry out your fiduciary responsibility. The investment policy statement should outline your prudent process of fund selection. Quarterly reports and analysis should be offered to monitor the plan investments to help you ensure compliance. Employee education meetings should be designed to help the plan to comply with ERISA Section 404(c), and participant investment guidance should be available to help participants to construct an appropriate asset allocation.
Slow and Steady Wins the Race
401(k) plans are difficult to maintain without knowledgeable help. That's why an experienced advisor should be consulted before you make any major changes to your plan, including assigning individuals to internal fiduciary roles. If you are not already working with an advisor experienced in servicing 401(k) plans, through our relationship with Sobel & Co., LLC, Oppenheimer & Co. Inc. can assist you with important issues such as who in your organization should hold fiduciary status.
This article was written by Richard Rowehl, AIF®, Executive Director, Retirement Services Department with Oppenheimer & Co. Inc. and submitted by Michael Israel Director, Investments from the Katz Israel Katz Private Client Group of Oppenheimer & Co. Inc. His opinions do not necessarily reflect those of the firm. This article is not and is under no circumstances to be construed as an offer to sell or buy securities. The material herein has been obtained from various sources believed to be reliable and is subject to change without notice. Oppenheimer & Co. Inc. does not give legal or tax advice. However, our Financial Advisors will work with clients, their attorneys and tax professionals to ensure all of their needs are met and properly executed. For more information, please contact your Sobel Company relationship manager or Michael Israel at (973) 245-4625.
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