News

Contribution and Benefit Limits

For 401(k) and other Qualified Plans 

For full details on the pension plan limits for 2020, visit the IRS Website.

*Applies for determining Highly Compensated Employees for the 2020 plan year.

Limits stated above are subject to the provisions of the plan. Refer to your plan document or contact your plan consultant (TPA) for more information.

The content of this document is for general information only and is believed to be accurate and reliable as of posting date but may be subject to change. Benefits Functional Fiduciaries does not provide investment, tax, plan design or legal advice. Please consult your own independent advisor as to any investment, tax, or legal statements made herein.

Benefits Functional Fiduciaries, 700 N. Central Ave., Suite 235, Glendale, CA 91203

Sheri A. Creger, CPFA  Ι  September 19, 2019

I am asked this question a lot, “What exactly does it mean to be a fiduciary and what am I responsible for?â€

Often, most people don’t understand the complexity and responsibility of being a plan fiduciary and don’t understand that plan fiduciaries may be held PERSONALLY LIABLE for breaching their duties. This means that your personal assets are at risk, and in some circumstances, you could even face jail time if you are found guilty of violating your fiduciary duty.

It is important that you understand your role as a plan fiduciary. ERISA assigns certain duties to plan fiduciaries and you must carry them out thoughtfully and diligently. If you don’t, your inaction may result in serious consequences, to both you personally and to the plan.

A plan fiduciary is any person or entity named in the plan document (Have you read your plan document lately?), any person or entity that has discretionary authority over the management of the retirement plan or its assets (all individuals exercising discretion in the administration of the plan, all members of a plan’s administrative committee and those who select committee officials), and any person or entity that offers investment advice with respect to plan assets (for a fee).

The overriding rule is that plan fiduciaries are required to act prudently, and solely in the best interests of the plan’s participants and beneficiaries. Failure to do so can have serious consequences.

And, just because you hire a fiduciary does not mean that you are now not a fiduciary.  You must do your due diligence and hire a partner with the knowledge and expertise to help you carry out the administrative functions of your 401k.

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Ginger Galloway, SPHR, MBA | February 8, 2019

The beginning of the year is a great time to update employee handbooks.  Even if you have a few employees, having a handbook helps make the work place easier to understand and some critical policies are required for all employers. Here are a few handbook areas you want to check to make sure you are still in compliance.  Last month SHRM (Society for Human Resources Management) recommended five areas that employers should check in their handbooks.  We are looking at those same areas but adding a different look.

Equal Employment Opportunity (EEO)

Besides Federal protections, many state and local agencies are establishing their own EEO guidelines.  You need to know if your state and local agencies have implemented additional protections, definitions, education requirements or posting requirements.  EEO protections filter into many handbook policies such as anti-harassment, staffing and hiring and termination policies.  Make sure these are all in compliance.

Reasonable Accommodations

Some states, such as California, clarified current laws such as California’s Lactation Requirement.  Providing a space in the employee restroom, separate from a stall, is not enough.  The space should be private such as an office or room that can be locked.  Also, many companies have wellness programs.  Employers need to ensure they are providing accommodations to people with disabilities to allow them to participate as well.

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Leaves of Absence

States and local agencies continue to expand leave of absence policies.  The most common expansion is mandatory paid sick leave.  Employers also need to know about domestic violence leave, paid family leave, and leave for military members and their families.  These leaves are extending into small employers.

Equal Pay and Pay Discrimination

Again, states and local agencies continue to expand fair pay laws.  It isn’t necessarily fair pay for the same work.  It can also be fair pay for comparable work.  In California, employers cannot ask a potential applicant what their pay was in prior positions.  Please review applications to ensure this is not a required field and make sure anyone involved in the hiring process knows they cannot ask this question.

Driving for Work

According to the National Safety Council, more than 90 percent of car crashes are due to human error and distracted driving is a main culprit.  If you have employees who regularly drive in the course of their job, you need to make it very clear that they must not text while drive and not be distracted.  Distractions can be anything that takes their eyes off of the road such as viewing GPS, reading devices or physical material, eating and talking to other people virtually or physically in the car.

Credit: iStockphoto.com

Smoke and Vape-Free Workplaces

California already has a bunch of ordinances and laws on the books prohibiting smoking in public places.  Ensure you have designated smoking areas outside of the workplace and away from entrances.  Also, questions have arisen regarding vaping and marijuana use.  Employers can prohibit workplace use of vaping devices.  Finally, employers in states where marijuana is legal should include a statement in their Drug and Alcohol-Free Workplace policy that marijuana use is prohibited, just like alcohol use is prohibited, in the workplace.

Violence in the Workplace

Employers have a responsibility to ensure a safe, violence-free and harassment-free workplace.  Many state and local agencies have regulations around violence at work and the employer is expected to know these regulations.  Mental health professionals indicate that individuals may exhibit certain behaviors and signs

Credit: iStockphoto.com

before engaging in violent acts.  Some of these behaviors and signs, especially if combined, are anger, hostility, extreme agitation and resentment, ominous threats, discussing weapons and their use, overreactions and personality conflicts with co-workers.  Policies should indicate that the business expects its employees to use reasonable judgement and if they hear or observe of potentially dangerous situations, they must report it immediately to management.

The IRS announced cost-of living adjustments affecting dollar limitations for pension plans and other retirement related limitations for 2019, see Notice 2018-83. Most limits experienced modest increases with a few remaining at the same level. Notably, the IRA limit is higher by $500, now at $6,000, the last increase to IRA amounts was in 2013. Salary deferral contribution amounts to 401(k), 403(b), and 457 plans are also up to $19,000.

Below is a summary of the announced adjustments*

*This summary is designed to provide an overview of the dollar limitations for retirement plans applicable in 2019 and is not comprehensive.  It is intended for general information only and is believed to be accurate and reliable as of posting date but may be subject to changes.  Benefits Functional Fiduciaries Inc. does not provide investment, tax, or legal advice.  Individuals should seek services from the appropriate tax and legal professionals as to how this information will apply to them under their individual circumstances.

Credit: iStock/egal

Ginger Galloway, SPHR | October 18, 2018

Part One of a Two-Part Series

We may be in the middle of autumn with cooler temperatures and Halloween decorations going up but in the HR world, this time of the year also means preparing for year-end activities.  Year-end activities can mean planning for performance reviews, calculating pay increases, bonus processing, open enrollment, and office parties.

Also, now is the time to prepare a project plan that can be used to manage these activities and identify who a task is assigned to and its due date.  Also make sure to build in a secondary review process to make sure nothing is missed.

HR manages so many things at year-end.  Therefore, this information is being brought to you in two articles.  The main areas we will cover will be planning, payroll, benefits, compensation, and compliance.

Below is a list of important year-end activities for planning and payroll that everyone should know.  All items may not pertain to you so use the ones that apply to your business.  Next week, we will cover benefits, compensation, and other compliance issues.

Year-End Activities

Credit: iStock/Michail_Petrov_96

Planning

• Develop a strategy to address business needs such as retention, recruiting, and training.
• Review HR expenses for the year and develop a budget for the new year.
• Review all complaints made during the year to identify trends, training needs, and what policies may need clarification.
• Review metrics for the year such as recruiting successes, turnover trends, and overtime.
• Review policies and compare them to new laws and update the employee handbook as necessary.
• Plan, schedule, and conduct performance reviews ensuring all employees have an in-person discussion.
• Update job descriptions after performance reviews are completed.
• Move prior year and 2018 records to storage making space for 2019 records.
• Audit all terminated employee information to ensure it is separated from active employee information including I-9 and medical information.

Credit: iStock/Michail_Petrov-96

• Obtain or develop a 2019 payroll calendar from your payroll processing vendor (or in-house payroll administrator) and make sure to include your company’s holidays.
• Identify year-end processing dates and deadlines with your payroll processing vendor (or in-house payroll administrator) and communicate this necessary information to employees and supervisors.
• Ask employees to verify their social security number, mailing addresses and dependent and emergency contact information.
• Encourage employees to receive their W-2s electronically, if offered.
• Remind employees they may want to submit new W-4s for 2019 before the first payroll. Provide deadline.
• Process any deductions, expense reimbursement, group term life over $50K, and any other payouts or taxes owed as necessary before end of December.
• Review and update ACA 1095 forms.
• Compare and review with your accounting department how many 1099s will be filed.

The earlier you begin planning, the better your holiday season will be for you, your family and friends.  Once you get these administrative tasks under control, you won’t be as overwhelmed since the day-to-day HR work must still get done.  December will be here before you know it.  If you do fall behind, give us a call and we can support you in any way you want.

Sheri A. Creger, CPFA 　Ι October 9, 2018

As a fiduciary, it is your role to understand the difference between an ERISA Fidelity Bond and Fidelity Insurance and what and who is covered. If you do not understand this, you expose yourself and all fiduciaries to the plan to potential liability.

ERISA Fidelity Bond

The ERISA fidelity bond protects the plan, not the fiduciary from losses caused by fraud, dishonesty, misappropriation or embezzlement on the part of the plan official/fiduciaries. ERISA requires that every fiduciary of an employee benefit plan be bonded unless an exemption is available. This includes every administrator, officer and employee with the authority to send in deposits, request benefits to be paid out or transfer plan funds. The bond must be issued by a Corporate Surety Company that issues Federal Bonds under the authority granted by the Secretary of the Treasure.

Fidelity Bond Basics

Plan Officials handling qualifying assets must be bonded for at least 10% of the amount of plan assets handled, with a minimum bond limit of $1,000 and maximum bond limit of $500,000. Plans that hold employer securities (ESOP) require a maximum bond limit of $1,000,000. Non-qualifying assets require 100% bonding.

In addition:

• the plan fiduciaries cannot have any control or interest in the surety or reinsurer;
• the bond must cover criminal losses (as described under ERISA); and
• the bond cannot have a deductible.

The employer is required to furnish information regarding this bond on its Form 5500. Without a fidelity bond in place, the fiduciary will be made to come out of pocket for any plan losses.

Fiduciary Insurance

Not like the mandated ERISA fidelity bond, fiduciary insurance is optional. Fiduciary insurance personally protects the fiduciary. Fiduciary Liability Insurance pays on behalf of the insured, the legal liability arising from claims from alleged failure to prudently act within the meaning of the Pension Reform Act of 1974. A plan fiduciary may not understand and I often find that they don’t realize that he/she can get sued personally or the extent of their personal assets at risk. Plaintiffs’ lawyers can try to recover specifically from each and every fiduciary to a plan (jointly and severally) for breaches of their duties to oversee the ERISA retirement plan.

Something to Consider

Sometimes employers think their “errors and omissions” or “directors’ and officers’ coverage will satisfy the ERISA fidelity bond requirement. You must read your coverages closely and understand what they cover. E&O or D&O insurance is not the same as a fidelity bond and those policies exclude fiduciary liability exposure as well as those exposures pertaining to the Employee Retirement Income Security Act.  Again, you must understand what polices you have/need and what is covered and not covered.  As a fiduciary it is your job to ensure you have a large enough bond to protect your retirement plan and not leave yourself and your fiduciaries exposed to possible liability.

BFF® can help! Let us review your policies/coverage and help you determine if your are properly covered.