Should You Establish A 4 Day Work-Week?

Should You Establish A 4 Day Work-Week?

As employers, there are a lot of things on our minds consistently. How do we increase productivity? How do we retain our workers and keep them happy? How do we become more profitable? There’s been a trending topic that claims to address each of these issues, so we decided to dive in a little deeper. The concept of the 4 day (or shortened) work-week has even earned its own name: The Compressed Workweek. But, who has tried it? And of those who have tried it, what were the results? 

Why change? 

According to a global survey of nearly 3,000 employees across eight countries conducted by The Workforce Institute at Kronos Incorporated, 45% of full-time workers said it would take less than 5 hours each day to do their job if they worked uninterrupted, while 72% of employees of employees would work 4 days or less per week if their pay remained consistent. Yet, 71% of employees also say that work interferes with their personal life. 

Who’s tried it? 

According to NPR, Microsoft Japan allowed workers to transition from their 5 day per week jobs to a 4 day work-week over the summer, allowing them to enjoy a three-day weekend while getting their normal paycheck. The result? A productivity boost of 40%, and lower electricity costs- a savings of 23%. They decided to change meeting times too, from the traditional hour to 30 minutes. To replace longer in-person meetings, they suggested utilizing time-saving communication tools such as chat channels. 

Andrew Barnes, founder of Perpetual Guardian in New Zealand tried the four-day work week in 2018 as a trial that allowed all of its employees a paid day off per week. Employees worked 30 hour weeks but were paid the same amount as they were paid when working 40 hour weeks. They were required to produce the same amount of work. After the trial, the company found that team engagement had increased noticeably, while stress decreased. The company has been implementing the policy on a long-term opt-in basis since last November.

The Bottom Line

The Compressed Workweek clearly has made a positive impact on some companies, but only a handful of industries have tried it. Experts are giving some conflicting information on the matter, but what is evident, is that inviting change and researching the topic could check a lot of boxes for both employers and employees. The common denominator is a flexible work environment. While that may mean Fridays off for some companies, does it make sense for everyone to take Fridays off? Probably not, but if there are ways to provide your employees balance and flexibility while cutting costs and increasing productivity, it’s a great alternative to consider. 

At Life, Inc. Retirement Services, our focus is ensuring you have the support you need as an employer to keep your employees engaged, increase retention, and ensure they are taken care of. If you’d like to talk with us more about our approach, schedule a consultation with us today! 

    Have more questions about retirement administration? Schedule a plan discussion with us or take 30 seconds to find which plan is best for your company with the retirement plan evaluator.

     

     

     

     

    How Will COVID-19 Change The Owner/Employee Relationship?

    How Will COVID-19 Change The Owner/Employee Relationship?

    The Covid-19 crisis is changing current employer to employee relationships dramatically.

    Forced business closings are resulting in unplanned employee layoffs. But many businesses remain open due to innovative methods of connecting with customers and employees. 

    We all hope these pandemic conditions will fade quickly. We know that eventually business conditions and the economy will return to normalcy.   But some ways of doing business and managing the business owner to employee relationship were already changing before the crisis. 

    These new attitudes and methods, currently expanded due to necessity, will likely continue even when the Covid-19 crisis becomes a memory.  These changes could actually increase profits and strengthen employer to employee relationships. 

    Following is a short list of what to expect in the future, when the economy bounces back from the Covid-19 crisis.

    Technology and Evolving Attitudes Will Enhance Employer/Employee Relationships.

    As referenced in this Forbes Magazine article, businesses are rediscovering the value of employee engagement. 

    Respecting employees, encouraging their participation concerning decisions, embracing them as a positive factor in the business’ big picture, rather than simply as cogs in a wheel – creates loyal, productive employees.  

    Loyalty creates employees who better serve customers; associates who act in the best interest of the business itself, rather than simply offering the minimum performance needed to earn a paycheck.   

    Working Remotely is Convenient and Profitable for Businesses and Employees.

    Many employees who formerly commuted to an office have taken their computers home due to stay-at-home orders and business closing requirements. Most are successfully completing their duties remotely. 

    If they can work from home during the crisis, many employers and employees will continue to do so to save time, gas, the hassle of heavy traffic and the need for the employer to provide expensive office space.

    Virtual Consultations And Meetings Save Time and Money

    Travel takes time and resources away from company profits. Virtual meetings will be considered more efficient.  They save employees travel time, save the company hotel and transportation expenses. The bottom line would benefit.  

    Savings on travel expenses could make more funds available for employee benefits.

    You can learn which retirement plan would best fit your company’s budget by clicking here

    Virtual Education Will Be Encouraged and/or Provided

    Many employers find it difficult to locate potential employees with the specific training required for open positions at their company. 

    College students find it difficult to pay off massive debt. Years of study for a specific degree may not be practical for some occupations, especially in the field of technology, where changes occur rapidly.

    So with this in mind, employers will be more open to the idea of offering continued education due to the lowered costs of virtual education options.

    An In-Sourcing Trend Could Increase Demand for Employees With Specialized Talents

    The lack of medical supplies during this crisis highlights the need to bring more manufacturing home to the United States. 

    fThe demand for those with specialized talents, not necessarily college degrees, may increase, such as talented people who specialize in low-cost creation techniques like 3-D printing.

    With a bit of foresight and planning, the economy that follows the COVID-19 crisis may be one which will feature not only greater profits, but a more positive employer/employee relationship.  

    Have more questions about retirement administration? Schedule a plan discussion with us or take 30 seconds to find which plan is best for your company with the retirement plan evaluator.

    Do I Need a Financial Advisor for a 401K?

    Do I Need a Financial Advisor for a 401K?

    You might be wondering if you need a financial advisor for your 401(k).

    Many employers, especially small business owners, are hard at work managing their own business and working closely with their customers or clients. A financial advisor can help you tackle the issues related to your 401(k).

    Here are a few things a financial advisor can do:

    1. Provide employees with financial advice
      2. Act as an investment manager
      3. Share fiduciary responsibility
      4. Help with plan design

    Do I need a financial advisor?
    Sometimes it’s hard for small business owners to understand what an advisor may be able to help them with. Apart from getting financial guidance, the following are some reasons why you need a financial advisor.

    1. It’s Good For Your Business

    Many employers, particularly small businesses, with limited time and resources, find the administrative and time-consuming 401(k) management unnerving. Financial advisors will help you avoid problems associated with 401(k) and give you peace of mind. This involves not only preventing you from getting penalized and fined, but also maintaining a plan’s qualified tax state.

    Given that in the past decade, according to Lex Machina, there have been over 83,000 ERISA-related cases that have been filed under The Employee Retirement Income Security Act (ERISA) in federal courts. You don’t want to end up in court for penalties and fines.

    Financial matters can be complex and complicated and often involving. An advisor can help you make sense of all the tasks involved and save you a lot of time, which you can spend making money.

    Also, having a financial advisor for your employees and yourself whom you can seek financial and investment advice from, is critical for the success of your business. An advisor will ensure your plan is being utilized to the fullest and also that your employees are getting the most out of the benefits

    2. Offers You Fiduciary Services

    If you’re to reduce the liability associated with your 401(k) plan, hire a financial advisor to serve as a fiduciary. While not all financial advisors offer fiduciary services, any fiduciary has the legal responsibility to act in the best interest of your 401(k) plan.

    3(21) fiduciaries share liability with you as the plan sponsor while a 3(38) fiduciaries take complete obligation for building and monitoring the fund lineup under ERISA.

    Having a great financial advisor can help your 401(k) plan flourish. A financial advisor who: takes up fiduciary responsibility, offers administrative assistance, and is committed to making your employees experience with 401(k) worthwhile is worth your time and money.

    Contact us today if you’re looking for a financial advisor who can entrust your business’s compliance, liability, and 401(k) administration.

      Have more questions about retirement administration? Schedule a plan discussion with us or take 30 seconds to find which plan is best for your company with the retirement plan evaluator.

       

       

       

       

      Plan Trustee: What Do They Do and Why Are They so Critical?

      Plan Trustee: What Do They Do and Why Are They so Critical?

      Most people tend to think that because their employers contribute money that goes into their retirement plan that they play the most significant role. However, in order to ensure your plan’s assets are managed adequately throughout your life, other essential functions need to step up to make sure tasks around your investments are done correctly, and your money is protected. For these reasons, some consider the plan’s trustee to be one of the most essential roles. 

      What is a Plan Trustee

      A trustee is someone responsible for the investments that are held by the plan. Their primary function is to act in the best interest of the plan’s participants, which they carry out by these specific duties: 

      • Recording: They are responsible for maintaining full and accurate records of your disbursements, transactions, and investments.
      • Accept Contributions: They are in charge of accepting the contributions to your plan.
      • Responsible for Distributions: They are in charge of authorizing the timing and the method of payment as well as the amount to the specific participants of the plan.
      • Determine Eligibility: They are in charge of determining the employees eligibility into the plan.
      • Accounting Services: They are responsible for the trust fund’s accounting, which will be used in the plan’s annual filings.
      • Agent: The trustee is often served with notices of any claim against the plan.  

      Why is a Trustee’s Role so Critical

      A trustee plays an extremely vital role in the management of your plan. They not only have the ability to exercise authority over the plan’s assets but also have the added responsibility of being the plan’s administrator. Their role is not only critical but comes with a lot of discretion and responsibility. 

      • The trustee’s main primary fiduciary duty is making sure the plan assets are managed in the best interest of its participants and the named beneficiaries. 
      • The trustee must follow the specific rules in administering the plan and following the standard of care that a reasonable fiduciary would pursue when fulfilling their critical responsibilities. Failing to do so can leave them liable for the damages that result. 

      Have more questions about retirement administration? Schedule a plan discussion with us or take 30 seconds to find which plan is best for your company with the retirement plan evaluator.

       Sources:

      What is a Trustee? Your Fiduciary Duties. (2015). By Beth Harrington. Benefit Resource Inc. 

       

       

       

       

      Contribution Limits You Need to Know

      Contribution Limits You Need to Know

      What types of things should you be thinking about?

      Employees Can Add More Money to Their IRA’s and 401k’s
      The IRS will allow employees to contribute up to $19,500 for 401k’s. That’s up from $19,000 in 2019. Employees 50 or older can contribute an additional $6500. That’s up from $6000 in 2019.

      The contribution limit for IRA’s remains the same at $6000. However, employees 50 years and older can contribute up to $7000 starting in 2020.

      Simple IRA and Simple 401k plans will also increase in 2020. Employees can invest up to $13,500 in these plans next year. That’s a $500 increase from 2019. For employees 50 and over the contribution limit stays the same at $3000.

      Profit-Sharing Plans
      Profit-sharing plans like a SEP IRA, and cash balance plan will also see contribution limit increases in 2020. One of the major benefits of these plans is that contributions are made totally by the employer. The maximum contribution to these plans in 2020 is $57,000, up from $56,000 in 2019.

      Health Care Savings Accounts
      For employees that have health care savings accounts the contribution limit will increase slightly in 2020. Employees with individual coverage can save up to $3,550 in 2020. That’s a $50 increase up from $3,500 in 2019. Employees with family plans can save up to $7,100. A $100 increase up from $7,000 in 2019.

      If you want more information on how to be prepared and other tax information, contact us today!

      Have more questions about retirement administration? Schedule a plan discussion with us or take 30 seconds to find which plan is best for your company with the retirement plan evaluator.

       

       

       

       

      The Safe Harbor 401(k) Plan: Everything You Need to Know and How to Maximize Contributions

      The Safe Harbor 401(k) Plan: Everything You Need to Know and How to Maximize Contributions

      In the United States, many businesses use the extremely popular Safe Harbor 401(k) plan. This is an employer-sponsored retirement plan that enables small business owners to make sure they are compliant with the Internal Revenue Service.

      They also use the Safe Harbor 401(k) to ensure that each of their employees, including themselves, no matter their salary or their income level, can maximize their company’s 401(k) plan. If an employee’s 401(k) plan includes the Safe Harbor provision, that means the employer will make annual contributions on behalf of their employees, which will be immediately vested.

      To fully understand how an owner can maximize their contributions, there needs to be an understanding of how the Safe Harbor Plan works.

      How the Safe Harbor 401(k) Plan Works

      Under the Safe Harbor 401(k) Plan, there are three options employers can choose from to contribute towards their employee’s retirement. Two of these are considered employer matches, which people refer to as the “Safe Harbor Match.” In addition, there are certain requirements that an employer needs to follow to make sure that their Safe Harbor 401(k) plan is properly set-up.

      Non-Elective Safe Harbor
      Under the Non-Elective Safe Harbor plan, an employer contributes at least 3% of each employee’s compensation. This amount is immediately fully vested, and the employee gets it whether they decide to contribute to the plan or not.

      Basic Safe Harbor Match:
      Under the Basic Safe Harbor Match, the company provides 100% matching of the first 3% of each employee’s contribution, plus an additional 50% of the next 2%. However, under this plan employees are required to contribute to their 401(k) to receive this match.

      Enhanced Safe Harbor Match:
      In this situation, the company matches 100% of the first 4% of each employee’s contribution (may be increased up to 6% without violating the ACP test safe harbor). Under the Enhanced Safe Harbor Match, the employees are also required to defer money to their 401(k) to qualify for this match.

      How to Adopt the Safe Harbor
      For New Plans: The Safe Harbor provisions have to be in place for at least three months if a company is adopting a new 401(k) or 403(b) plan. This means the plan must be in place no later than October 1 to include Safe Harbor provisions for that first plan year.

      For Existing Plans: The Safe Harbor provisions can only be included to an existing 401(k) plan before the beginning of the plan year. Also, they must be in effect for the entire year.

      Timing Requirements
      Under the Safe Harbor Plan, certain timing requirements need to be met by the employer. Under these provisions, the employer is required to provide a Safe Harbor Notice within a reasonable period before each plan year. This requirement is deemed to be satisfied if the notice is provided to each eligible employee at least 30 days and not more than 90 days before the beginning of each plan year. This Notice will usually discuss the following: a description of applicable provisions for the upcoming year, withdrawal conditions, employee contribution conditions, pre-tax contribution conditions, and a disclaimer that the employer is not required to offer the Safe Harbor Plan.

      How to Max Out Contributions

      The purpose of the 401(k) plans, is to make sure that all Americans are ready for retirement, not to create tax breaks that are solely for business owners and top executives. That’s why the government created the Safe Harbor 401(k) Plan. Not only to help companies avoid the IRS non-discrimination rules testing mandates, which can be a large burden on small businesses, but also to make sure the company ensures a balanced playing field for all its employees, providing access and equal benefits to all.

      Good News for Business Owners:
      The Safe Harbor Match is tax-deductible for a company that takes part in the plan. A business owner has the ability to contribute the maximum annual deferral amount to their 401(k) plan ($19,500 for 2020 in addition to any catch-up contributions), they can also receive additional savings from the company’s matching contributions (as the company is also an “employee”), and further, the company can also deduct all their matching contributions at tax time (up to the IRS limit of $57,000).

      Good News for Employees:
      The Safe Harbor 401(k) Plan allows all employees to contribute the maximum allowable amounts to their 401(k), including the employer, which is essentially a tax-free bonus for them. This is a tremendous incentive for employees to save for their future retirement.

      Is the Safe Harbor 401(k) Plan Right For You?

      Overall, a well-designed 401(k) plan can help a business not only recruit, but retain its employees. However, navigating through all the pros and cons of any retirement package, including the Safe Harbor 401(k) plan, can be difficult for any company to decide if it’s the right fit. If you would like to decide if the Safe Harbor option is right for you or to see how the Safe Harbor plan can benefit your company, contact us today!

      Have more questions about retirement administration? Schedule a plan discussion with us or take 30 seconds to find which plan is best for your company with the retirement plan evaluator.

      Sources:
      1. What Is a Safe Harbor 401(k) and Why Is It Important in 2019? (2019) By Brian O’Connell. The Street
      2. Safe Harbor 401(k) Plans: Everything You Need to Know. (2018). By Vijay Mirpuri. Human Interest Blog