Employee Benefits Update: October/November 2014

This issue’s topics include:

  • Target Date Funds and Fiduciary Duty: Examine your TDFs’ glide paths to ensure suitability
  • ESOPs facing tougher scrutiny by regulators and courts
  • Are your 401(k) plan administrative fees allocated equally?
  • DOL sets 2015 regulatory agenda

 

Employee Benefits Update October/November 2014

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As always, we hope you enjoy this edition of our newsletter and we look forward to receiving your feedback. Should you have any questions regarding the information contained in the attached materials or our service offerings, please feel free to contact me directly.

Are your employees taking advantage of your company’s retirement plan?

Your company’s retirement plan is an important part of your employees’ total compensation package. It can be a contributing factor in both attracting and retaining a quality workforce. One way you can maximize this benefit is by offering automatic enrollment for your employees.

Nest Egg

In addition to making it easy for employees to save for their retirement, automatic enrollment dramatically improves participation which can also, depending on your type of arrangement, make it more likely that your plan will pass annual nondiscrimination testing. It’s a win-win.

As an employer, you have two choices when it comes to automatic enrollment arrangements:

Eligible automatic contribution arrangements (EACAs)

  • More flexible rules on employer/employee contributions
  • Subject to annual nondiscrimination testing
  • Employer can set up a vesting schedule of up to 6 years

Qualified automatic contribution arrangements (QACAs)

  • More restrictive rules on employer/employee contributions
  • Automatically passes non-discrimination testing
  • Employer contributions must fully vest upon 2 years of service

Ready to take the next step? Once you’ve chosen the type of arrangement you’d like to set up, you’ll need to amend your plan document and set up default investments. You’ll also need to provide your employees with a notice describing the new process and participant rights.

Keep in mind, however, that regulations related to employee benefit plans are constantly evolving. Insero & Company has an experienced, dedicated Benefit Plan Audit Team, so you can count on our ERISA knowledge and ability to provide answers to your questions; from filing and reporting requirements to complex interpretations of benefit regulations.