Sixth Circuit Holds That Security Guards’ Meal Periods Were Not Compensable, Despite Requirement That Guards Remain on Company Premises and Perform Work Duties

By:  Carrie S. Bryant

 

On January 7, 2015, the Sixth Circuit issued its opinion in Ruffin, et al. v. MotorCity Casino, No. 14-1444 (6^th Cir. Jan. 7, 2015), addressing the issue whether
MotorCity Casino’s security guards, who were required to remain on company
property during meal periods, monitor two-way radios, and respond to emergencies,
spent their meal time predominantly for their own benefit or that of the casino.  If the Court determined that the security guards spent their meal time predominately for the benefit of MotorCity, the time would be compensable under the Fair Labor Standards Act
(“FLSA”).  The Sixth Circuit concluded that the meal periods did not predominantly benefit the casino.  Therefore, the meal periods were not compensable.

In Ruffin, current and former security guards sued MotorCity Casino in district court, alleging that they were entitled to overtime payments under the FLSA because they worked over 40 hours per week, including their half hour meal periods.  The guards were free to eat, socialize with co-workers, use their cell phones, and play cards during their breaks.  However, MotorCity required the guards to stay on the casino’s premises, listen to their radios, and respond to dispatcher emergency calls during their meal time.

The district court determined that the radio monitoring activity was not a substantial job duty, and did not regularly disrupt the guards’ meal periods.  Therefore, the court held that the meal periods were non-compensable.  The guards appealed to the Sixth Circuit.

The Sixth Circuit analyzed three factors to determine whether the security guards’ meal times were in fact compensable: 1) whether the employees were “engaged in the performance of any substantial duties” during the meal periods, 2) whether MotorCity’s business regularly interrupted the employees’ meal periods, and 3) the employees’ inability to leave MotorCity’s property during meal breaks.

First, the Sixth Circuit determined that the security guards were not asked to perform substantial job duties during their meal periods.  Monitoring a radio did not qualify as a substantial job duty where the employees were also allowed to eat, read, socialize and conduct personal business during their meal times.  The security guards offered no  evidence that they were prevented from engaging in any of these activities, or that
monitoring two-way radios interfered with their enjoyment of these activities.

Second, the security guards did not produce evidence showing that their meal periods were regularly interrupted for emergency calls.  To the contrary, the evidence showed that
interruptions rarely ever occurred.  In fact, one employee recalled missing only one meal period in more than 10 years’ employment.

Lastly, a meal period is not compensable merely because an employee is required to remain on company premises for the entire meal period.  The question is whether employers require employees to stay on company property as a way of getting the employees to perform unpaid work.  Here, despite being required to stay on MotorCity’s grounds, the security guards were allowed to spend their meal periods the way that any off-duty employee would be allowed to spend a meal period, including surfing the Internet, socializing and eating.

The Ruffin case provides just one example of a circumstance in which it would be acceptable to require an employee to perform work duties during an uncompensated meal
period.  In this case, the Sixth Circuit evaluated the totality of the circumstances, and found that the security guards did not meet their burden of proving that they spent their meal periods primarily for the employer’s benefit.  Had MotorCity imposed greater duties and more restrictions on the security guards during meal periods, the case may have been decided differently.

As a result of this case, employers may want to evaluate which job duties they require employees to perform during meal periods to determine whether they should be compensated.  Employers are encouraged to consult with an experienced labor and
employment attorney, such as the author, to assess their meal and break policies.

This article was written by Carrie S. Bryant who is a member of the Legal Affairs Committee and an Attorney of the law firm of Dykema Gossett PLLC, located in its Bloomfield Hills, MI office.  She can be reached at (248) 203-0728 or cbryant@dykema.com.

Detroit SHRM encourages members to share these articles within their organizations; however, members should refrain from forwarding them outside their organizations or
printing for mass distribution without written permission of the Detroit SHRM
Executive Committee. January 2015.

Zero Tolerance Policies May Expose Employers to Reverse Discrimination Claims

Zero Tolerance Policies expose employers to liability, including reverse discrimination claims, when they are not consistently enforced.On October 28, 2014, the Michigan Court of Appeals (in Hecht v. National Heritage Academies, Inc.) affirmed a $535,120.00 jury verdict in favor of a teacher (Caucasian) that was terminated for making racial comments/jokes (such as expressing a preference for a white table over a brown table and stating that the brown needed to go). According to the evidence presented at trial, several African American employees were not disciplined for engaging in racial “banter”. The evidence revealed that the following actions did not result in any discipline: African American employees used the “N” word; One African American employee referred to a Dora the Explorer mural as “Laquisha” since her skin was so dark; and Another African American employee asked why a white person would be eating pork chops for dinner. Since it was undisputed that no African American employee had ever been disciplined for engaging in racial “bantering”, the jury found that reverse discrimination occurred. The foregoing is a lesson that a Zero Tolerance Policy violation should always result in disciplinary action up to and including discharge. Even if the parties involved are not offended, it is a good practice to at least issue a warning so the employer has a defense to a disparate treatment claim if the policy is enforced in the future. This article was written by JAMES M. REID, a member of the Legal Affairs Committee of Detroit SHRM, a Resource Partner of Detroit SHRM, and a shareholder of the law firm of Maddin, Hauser, Roth & Heller, P.C. located in Southfield, Michigan. He can be reached at (248) 351-7060 or jreid@maddinhauser.com.

Is your 401(k) ready for an IRS audit?

By: Victor H. Hicks II, CFP®, AIF®
Owner, Managing Principal
Lumin Financial, LLC

An Independent Registered Investment Adviser
vhicks@luminfinancial.com

 

As a plan sponsor or trustee, complying with ERISA regulations is likely at the top of your list of 401(k) plan administration concerns.  Not surprisingly, the IRS is similarly concerned about whether plans are in compliance with the Internal Revenue Code.  During the annual review process, plans should proceed with caution when determining if an independent audit is required.  A misstep in this area can be very costly.

The annual Form 5500 filing for a qualified retirement plan generally must include audited financial statements for the plan. However, the U.S. Department of Labor (DOL) exempts small retirement plans from the general audit requirement under certain conditions.

Definition of a Small Plan:  Plans with fewer than 100 participants at the beginning of the plan year are eligible for the audit waiver if they meet specific requirements. In addition, a plan that has between 80 and 120 covered participants at the beginning of the plan year that filed a small plan annual report for the previous year may elect to continue to file as a small plan.

Covered participants generally include active plan participants and beneficiaries; employees who were eligible to participate in the plan as of the beginning of the plan year, even if they don’t contribute to the plan; and terminated participants who have plan account balances.

Other Waiver Requirements:  In addition, a plan has to meet three other basic requirements to be eligible for the audit waiver:

• As of the last day of the preceding plan year, at least      95% of the plan’s assets must be “qualifying plan assets.” If less than      95% are qualifying plan assets, any person who handles nonqualifying      assets must be bonded in an amount at least equal to their value.
• The plan must include certain information in the      Summary Annual Report (SAR) furnished to participants and beneficiaries in      addition to the usual required information.
• The plan administrator must furnish, without charge,      copies of statements the plan receives from financial institutions holding      or issuing the plan’s qualifying plan assets to any participant or      beneficiary who requests the information. In addition, the administrator      must provide participants evidence of any required fidelity bond, upon      request.

During the annual review, we suggest that plan sponsors exercise due care when determining whether an independent audit is required.  If you are unsure whether your plan requires an audit, or you’re if you would like assistance finding a qualified 401(k) plan auditor, please call a Lumin Financial adviser.

ABOUT LUMIN FINANCIAL

Lumin Financial is a fee-only independent Registered Investment Adviser, specializing in 401(k) plans for small- to mid-sized employers. Lumin Financial advisors serve plan sponsors throughout the Midwest with a disciplined approach to managing plan investments, counseling on fiduciary risk matters, and reducing excessive plan fees. In addition to managing investments and risk, Lumin delivers personalized financial education to plan participants. Let them help you plan a clear direction for a bright future.  www.luminfinancial.com

Lumin Financial, LLC is a Registered Investment Adviser.  Information presented is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any specific securities, investments, or investment strategies.  Investments involve risk and unless otherwise stated, are not guaranteed.  Be sure to first consult with a qualified financial adviser and/or tax professional before implementing any strategy discussed herein.  Please note, changes in tax laws may occur at any time and could have a substantial impact upon each person’s situation. While we are familiar with the tax provisions of the issues presented herein, as Financial Advisors we are not qualified to render advice on tax or legal matters.  You should discuss any tax or legal matters with the appropriate professional.

 

How to know which Retirement Plan is right for your small business

By: Victor H. Hicks II, CFP®, AIF®
Owner, Managing Principal
Lumin Financial, LLC
An Independent Registered Investment Adviser
vhicks@luminfinancial.com

 

As a small business owner, you should consider the advantages of establishing an employer-sponsored retirement plan. Generally, you are entitled to a tax deduction for plan contributions. You are required, however, to include certain employees in the plan and to give a portion of the contributions your business makes to participating employees. Nevertheless, a plan can provide you with a tax-advantaged method to save for your own retirement, while providing your employees with a powerful benefit. Here’s a look at several retirement programs appropriate for a small business:

Payroll Deduction IRA

This is a simple way for you and your employees to save for retirement without having to formally adopt a plan. Each participant can make contributions of up to $5,500 for 2014, while participants age 50 and older can make an additional $1,000 of catch-up contributions. There are no annual reporting requirements. Withdrawals can be made at any time, subject to income taxes. (Early withdrawals generally are subject to an additional 10% penalty.)

SEP

Also set up with IRAs, a Simplified Employee Pension (SEP) can accept much larger contributions — all made by the employer. A SEP must be offered to all employees who (1) are at least 21 years old, (2) have been employed by you for three of the last five years, and (3) earn compensation of at least $550 (in 2014). A uniform percentage of pay must be contributed for each employee in any given year, although you can vary the percentage — across the board — and even choose not to contribute in a given year.

Annual contributions per participant are capped at $52,000 or 25% of compensation for 2014. This plan has modest start-up and operating costs. Contributions are 100% vested, and withdrawals are permitted at any time, subject to taxation and a potential early withdrawal penalty.

SIMPLE IRA Plan

Available to employers with 100 or fewer employees, a SIMPLE IRA allows employees to contribute through payroll deductions and requires employer contributions. The maximum amount an employee can defer is generally $12,000 for 2014. Employers must either match employee contributions dollar for dollar — up to 3% of compensation — or make a fixed contribution of 2% of compensation for all eligible employees. Eligible employees can make catch-up contributions of up to $2,500 (in 2014).

A SIMPLE IRA must be offered to all employees who have earned $5,000 in any prior two years and are reasonably expected to earn $5,000 in the current year. Plan set-up is relatively easy.

 

401(k) Plans

401(k) plans allow employees to contribute salary on a pretax basis and, if desired, can also allow after-tax Roth contributions. You can choose a traditional, safe harbor, or automatic enrollment safe harbor plan design.

 

The safe harbor design eliminates the discrimination testing required in traditional 401(k)s and encourages participation by requiring employer contributions of 3% of pay or based on a specified matching schedule. The plan must be offered to all employees at least age 21 who worked at least 1,000 hours in a previous year. Some employer matching funds may vest over time, per plan terms.

 

Automatic enrollment safe harbor 401(k)s are also available. Like the basic safe harbor design, the automatic enrollment variety generally eliminates the need for discrimination testing. Employees can opt out after receiving notice from the plan.

 

If your small business is ready to implement a retirement plan, contact a Lumin Financial adviser for help deciding which type is right for your organization and its employees.

ABOUT LUMIN FINANCIAL

Lumin Financial is a fee-only independent Registered Investment Adviser, specializing in 401(k) plans for small- to mid-sized employers. Lumin Financial advisors serve plan sponsors throughout the Midwest with a disciplined approach to managing plan investments, counseling on fiduciary risk matters, and reducing excessive plan fees. In addition to managing investments and risk, Lumin delivers personalized financial education to plan participants. Let them help you plan a clear direction for a bright future.

www.luminfinancial.com

Lumin Financial, LLC is a registered investment adviser.  Information presented is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any specific securities, investments, or investment strategies.  Investments involve risk and unless otherwise stated, are not guaranteed.  Be sure to first consult with a qualified financial adviser and/or tax professional before implementing any strategy discussed herein.  Please note, changes in tax laws may occur at any time and could have a substantial impact upon each person’s situation. While we are familiar with the tax provisions of the issues presented herein, as Financial Advisors we are not qualified to render advice on tax or legal matters.  You should discuss any tax or legal matters with the appropriate professional.

When Life “Gives you Cancer,” Make Lemonade!

Written by Kevin Watson – Director of Business Development with EDSI Consulting

Ten years ago, I was twenty-five years old and thought I had the world figured out.  I had been dating my college sweetheart for 4 years, I was living in beautiful Austin, TX, I had a successful job, I had just purchased my first house, and I was saving up to buy an engagement ring.  Then out of the blue, my life was turned upside down.

My girlfriend had gone to the doctor for a routine check-up, when they asked her “Have you been keeping an eye on this?”  “An eye on what?” she replied.

“Well, you have a suspicious lump.  Based on your age, I’m sure it’s nothing…but we would like to do a needle biopsy to make sure.”

As you may have guessed by the title of this article, it wasn’t “nothing.”  My girlfriend was diagnosed with breast cancer at the age of 25, and in rapid succession she went through multiple surgeries, chemotherapy, and radiation.  For time’s sake, I will give you the Cliff’s Notes version of the story. After she completed her very aggressive treatment regimen, she was told that she was in remission and we started to move on with our lives.  We got engaged, and started making plans for the wedding and the honeymoon.    Exactly one month before the wedding, our lives were once again turned upside down.  She went in for a doctor’s appointment, and was told that they needed to run some additional tests/scans (due to some elevated tumor marker tests).  After several hours of waiting, the doctor came in and told us that the cancer had returned.  She told us that the cancer was very aggressive, and that realistically we were probably looking at 12-24 months.  Needless to say, this is not the news that you expect to hear at the age of 27 (especially not a month before your wedding).

There aren’t enough words to describe how amazing/inspiring she was over the next few years.  She made a pledge to live life to the fullest, and inspired countless others to do the same.  She made a bucket list, and started chipping away at the list immediately (getting married, going on a honeymoon, going skydiving, seeing the Grand Canyon, going to Europe, starting a charity event, etc.).  She always told me that she was happy that she was diagnosed.  She said that it put things into perspective, and made her appreciate what was truly important in life.  She didn’t just say it, she meant it and lived her life that way.

She also did something that I am forever grateful for.  She told me that if I sat around and felt sorry for myself after she was gone, that she would come back and kick my @#$!  She told me that she wanted me to travel, to fall in love, to get married, to have kids, and raise a family.  She encouraged me to get outside of my comfort zone and to take risks.

She passed away over four years ago, and I hope that I have made her proud.  Since her passing I left my previous job and found my dream job.  I have been on multiple road trips across the U.S., I have hiked in the Australian Outback, swam in the Great Barrier Reef, been on a photo safari in Africa, been to Hawaii, Rome, Venice, Florence, and the Greek islands.  I have spent more time with family and friends…and try not to get bogged down by inconsequential things that would have stressed me out in the past.  I have also helped to carry on her legacy by keeping the charity event that she started alive and growing.  After our event this September, our charity event ( www.brasforacausemichigan.com ) will have raised over $500,000 for Gilda’s Club Metro Detroit.  I also took her up on another piece of advice.  I fell in love.  I got married, and two weeks ago we welcomed our son into the world (Alexander David Watson)!

I would encourage each and every one of you to learn from what we went through.  Don’t wait for tragedy to befall you before you truly realize what is important in life.  Make a list of things that you want to accomplish in life, and start chipping away at it tomorrow.  Live life to its fullest, and inspire those around you to do the same!

Thanks for reading, and I hope that you enjoyed.

Sincerely,

Kevin Watson

This Life Lessons Learned Along the Way article was written by Kevin Watson, a Resource Partner of Detroit SHRM, and the Director of Business Development with EDSI.  He can be reached at (517) 402-2732 or kwatson@edsisolutions.com

Employee Financial Distress: The Perfect Storm for Employers

Employee Financial Distress

The Perfect Storm for Employers

“The lack of money is the root of all evil.” Mark Twain

Submitted by:  Cherri Smith, CPC, Ulliance, Inc.

From a wellness perspective, financial wellness is one of the most important dimensions and can have an enormous impact on an individual’s health and well-being.  According to Personal Finance Employee Education Foundation (PFEEF), “Financially distressed employees have trouble functioning in their jobs, and this is hurting their physical health as well as taking a bite out of the employer’s bottom line.”

When a person is experiencing financial difficulties often they are in such a state of stress that they experience health issues.  According to survey findings, highly debt stressed employees are:

• More than 13 times more likely than low to no stress people to lose sleep at night
• More than seven  times as likely to have severe anxiety
• Almost seven times as likely to take stress out on others
• Nearly six times as likely to experience severe depression
• 4 times as likely to have ulcers or other digestive problems
• Twice as likely to have heart problems and migraines

All of these things lead to low engagement, low productivity, absenteeism, healthcare claims and presenteeism from dealing with financial issues during work hours. Not only do these symptoms appear on the job but they are evident at home leading to marital distress, social distress and often times a feeling of failure and loss of purpose.  Remember the eight dimensions of wellness including financial, emotional, social, spiritual, occupational, physical, intellectual and environmental? Ignoring and not addressing the financial dimension can really upset the balance!

When a person is in pain it is natural to be laser focused on the pain until it is relieved. In this state, a person cannot see anything else but the pain and all else fades to a lessor priority.  Employers should understand that this lack of focus impacts them to a large degree even though it is the employee’s responsibility.   According to a study by MetLife, employees are looking to their employer to provide financial education.

“Offering financial education in the workplace is an effective way to both drive productivity and demonstrate empathy. Despite the fact that 50% of employers identify financial education to help employees become financially secure as a very important benefits strategy, only 34% currently offer financial education workshops. This could be a missed opportunity: the Study shows that 49% of employees who do not have access to financial education through the workplace would be interested in having this opportunity.”

What can employers do from a financial wellness perspective?

• Offer a wide range of financial education options.  The source of financial stress can range from living paycheck to paycheck through saving enough for retirement.  This could mean involving organizations like debt consolidation companies and financial planning resources.  There are many companies like MetLife and Greenpath who offer education at no cost to the employee or employer.
• Partner with a stand-alone Employee Assistance Program (EAP) provider to help with the emotional and behavioral impact of financial stress.  Stand-alone programs not embedded in other benefits, provide stability and familiarity for employees so they know who to call for assistance.  EAP services embedded in Life or Disability plans can change each time the employer decides to change carriers leading to confusion and low utilization.
• Partner with a wellness provider that offers Behavioral Coaching.  Coaching can address the beliefs, assumptions, emotions and behaviors surrounding money and can bring a level of awareness to the source of the financial distress.  A coach will work with the employee to help change mindset leading to lasting behavior change.  They also help the employee to create plans to be more productive at work while he or she addresses financial issues.
• Offer wellness incentives for individuals to take advantage of financial education as well as other educational opportunities.  Studies show that more educated a person is the healthier they tend to be. Knowledge is power.

People who are financially stressed often times feel alone and ashamed and don’t know where to turn for help.  Employers have a phenomenal opportunity to provide assistance that will not only improve the lives of their employees but also the company’s bottom line.

I welcome your feedback and any ideas you have for addressing financial wellness!  Stay tuned for the next wellness dimension: Emotional.

In the meantime, live well!!

Cherri Smith, CPC
Ulliance, Inc.

For more information regarding Ulliance EAP and Wellness Programs call 1-248-273-6229

 

 

Back to basics: 401(k) plan record retention

By: Victor H. Hicks II, CFP®, AIF®
Owner, Managing Principal
Lumin Financial, LLC
An Independent Registered Investment Adviser
vhicks@luminfinancial.com

 

Retirement plans create a massive amount of paperwork, and our clients often wonder how to manage the documents in order to be both compliant and sensitive to the information they contain.  Amid plan documents, summary plan descriptions (SPDs), beneficiary information, data needed for testing, the tests themselves, governmental reporting, and contribution/distribution information, it’s easy to feel swamped by archived paperwork.  Fortunately, the Employee Retirement Income Security Act (ERISA) provides rules for retaining retirement plan records. In addition, the U.S. Department of Labor (DOL) has issued regulations on keeping these records in electronic form. Keep in mind that the longer the paper trail, the easier it will be for a plan to respond to inquiries from a governmental agency, plan auditor, or requests for information from plan participants.

 

Whose responsibility is it?

 

Generally, the burden of record retention falls on the plan administrator (the employer). However, it is possible that the job may be delegated to an outside service provider under the terms of its service agreement. Prior to changing service providers, employers should ensure that they receive copies of all necessary plan records from their current provider to alleviate future issues involving record retrieval.

 

How long must records be preserved?

 

Some plan records are retained for a fixed time period; others must be retained permanently. According to ERISA (Section 107), records used in the preparation of governmental reporting  (such as Form 5500 and Form 1099-R) and participant disclosures (such as participant statements) must be preserved for at least six years from the date the report was filed (or should have been filed) or the disclosure provided. Note that retained reporting records must provide enough detail for the government to verify the accuracy of the report.

 

Plan records that must be maintained permanently include plan documents (including all adoption agreements and plan amendments), IRS determination letters, insurance contracts, SPDs, and board resolutions.

 

What about participant information?

 

As a practical matter, plan administrators may want to keep participant records longer than six years in case of legal action, such as participant divorce proceedings or disgruntled employee lawsuits. Participant information that should be retained includes:

 

• Determination of eligibility

 

• Hire and termination dates

 

• Beneficiary designations

 

• Notarized spousal consents and waivers

 

• Loan, hardship, and distribution documentation

 

• Hours worked for vesting and allocation purposes

 

• Compensation used for testing and allocations

 

• Elective deferral, matching contribution, and payroll records

 

How should plan records be preserved?

 

Proper and complete archiving of plan records is essential. Due to technological advancements, many transactions no longer take place on paper, which presents an added challenge. According to DOL regulations, electronic media may be used to comply with record retention rules provided the following requirements are met:

 

• The recordkeeping system has reasonable controls in place to ensure the accuracy of the records.

 

• The electronic records are maintained in reasonable order and in a safe and accessible place.

 

• The recordkeeping system should be capable of indexing, retaining, preserving, retrieving, and reproducing the electronic records. (The retrieval issue becomes more interesting as equipment is updated and upgraded. For example, records retained on floppy disks may fail this test if no system drives are maintained to read that media).

 

• The electronic records can be readily converted into legible paper copies.

 

• The recordkeeping system is not subject to restrictions that would inappropriately limit access to the records.

 

With a few exceptions, original paper records may be disposed of after they are transferred to an electronic recordkeeping system, provided the system complies with these requirements. The original may not be discarded if it has legal significance or inherent value in its original form (e.g., notarized documents, insurance contracts, stock certificates, and documents executed under seal).  If you have questions about which documents you must keep and for how long, please contact a Lumin Financial advisor.

 

ABOUT LUMIN FINANCIAL

Lumin Financial is a fee-only independent Registered Investment Adviser, specializing in 401(k) plans for small- to mid-sized employers. Lumin Financial advisors serve plan sponsors throughout the Midwest with a disciplined approach to managing plan investments, counseling on fiduciary risk matters, and reducing excessive plan fees. In addition to managing investments and risk, Lumin delivers personalized financial education to plan participants. Let them help you plan a clear direction for a bright future.

www.luminfinancial.com

Lumin Financial, LLC is a registered investment adviser.  Information presented is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any specific securities, investments, or investment strategies.  Investments involve risk and unless otherwise stated, are not guaranteed.  Be sure to first consult with a qualified financial adviser and/or tax professional before implementing any strategy discussed herein.  Please note, changes in tax laws may occur at any time and could have a substantial impact upon each person’s situation. While we are familiar with the tax provisions of the issues presented herein, as Financial Advisors we are not qualified to render advice on tax or legal matters.  You should discuss any tax or legal matters with the appropriate professional.

A checklist for plan sponsors to ensure 401(k) plan compliance and optimization

BY: Victor H. Hicks II, CFP®, AIF®

Owner, Managing Principal
Lumin Financial, LLC
An Independent Registered Investment Adviser
vhicks@luminfinancial.com

 

Once a retirement savings plan has been approved and is in place, it’s tempting to sit back and adopt an “I’m done, hands off” attitude. However, to ensure that a plan will continue to operate effectively, employers should periodically review plan provisions and features. Here are some points we remind our clients to check:

How the Plan Is Presented. The more convinced employees are of the wisdom of saving for retirement, the greater the level of employee participation. The greater the participation, the more the plan can benefit all employees — including highly compensated employees. Regular meetings, newsletters, and handouts are effective means of communicating plan advantages. Check to make sure printed materials are up to date and easy to understand, and distribute them frequently.

Plan Investments. Employers that sponsor participant-directed plans can limit potential legal liability for losses caused by employees’ investment decisions if plan investment choices meet certain requirements under Section 404(c). Very generally, where 404(c) protection is sought, a plan should offer at least three “core” investment choices, allow employees to switch investments at least once each quarter, and provide participants with adequate disclosure of specified investment information.

Administration. Participants and beneficiaries must be given a copy of the Summary Plan Description (SPD) within 120 days after a plan is adopted or within 90 days after becoming eligible to participate in the plan or receive benefits. Review the SPD to make sure it accurately describes the provisions of your plan. If changes have been made to the plan document — which is likely, given the recent tax law changes — then all participants must receive a notification of these changes within 210 days after the end of the plan year in which the changes were adopted. Generally, all participants must receive a copy of the SPD every five years.

Summary annual reports must be distributed to participants within nine months after the close of the plan year. If a plan receives an extension to file its annual report (Form 5500) with the IRS, then the summary annual report must be distributed within two months after the end of the extension.

Plan Rollovers. Qualified plans must allow a participant to elect direct rollover of any eligible distribution to an IRA or another employer-sponsored retirement plan. Your plan should have procedures in place to handle direct rollovers.

Bonding. Generally, plan fiduciaries and others who handle the assets of a plan must be bonded. The bond must be equal to at least 10% of the funds handled by the bonded individual, but cannot be for less than $1,000 and need not be for more than $500,000.

Loans to Participants. Loans that are not properly administered may be treated as constructive distributions resulting in taxable income to the recipients. Review loans to make sure that loan balances do not exceed the maximum limitations. Unless used to finance the purchase of a principal residence, all loans must be repaid within five years. A plan may impose more stringent conditions on loans than the law requires.

Plan Forms. All forms should meet current requirements. Forms that may need updating include beneficiary designation forms, benefit election forms, and the notice of distribution options.

If you are unsure whether your plan currently meets all the requirements of our checklist, or if you would like assistance reviewing your plan, please call a Lumin Financial adviser.

ABOUT LUMIN FINANCIAL

Lumin Financial is a fee-only independent Registered Investment Adviser, specializing in 401(k) plans for small- to mid-sized employers. Lumin Financial advisors serve plan sponsors throughout the Midwest with a disciplined approach to managing plan investments, counseling on fiduciary risk matters, and reducing excessive plan fees. In addition to managing investments and risk, Lumin delivers personalized financial education to plan participants. Let them help you plan a clear direction for a bright future.

www.luminfinancial.com

Lumin Financial, LLC is a registered investment adviser.  Information presented is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any specific securities, investments, or investment strategies.  Investments involve risk and unless otherwise stated, are not guaranteed.  Be sure to first consult with a qualified financial adviser and/or tax professional before implementing any strategy discussed herein.  Please note, changes in tax laws may occur at any time and could have a substantial impact upon each person’s situation. While we are familiar with the tax provisions of the issues presented herein, as Financial Advisors we are not qualified to render advice on tax or legal matters.  You should discuss any tax or legal matters with the appropriate professional.

Why I Love HR

Josh Bersin visited Detroit SHRM on May 20th to present “Simply Irresistible: How to Attract, Develop and Engage People in Today’s New Workplace.”   Following the presentation, Josh posted this Blog on LinkedIn.  Thank you, Josh!

http://www.linkedin.com/today/post/article/20140525180611-131079-why-i-love-hr

 

Great Lakes Employee Benefit Services changes name, combines with McGraw Wentworth

Troy, Michigan, March 31, 2014: Great Lakes Employee Benefit Services, which was acquired by Marsh & McLennan Agency LLC (MMA) in February 2014, is joining forces with another Michigan-based MMA firm, McGraw Wentworth. The combined employee group benefits brokerage firm will operate as McGraw Wentworth, a Marsh & McLennan Agency LLC company. Great Lakes’ founders Joseph Coan and Jim Scoggin and their client service staff became employees of McGraw Wentworth in February. As of March 31, 2014, all employees are now located at McGraw Wentworth’s headquarters in Troy, Mich. McGraw Wentworth now has 87 employees providing strategic benefit consulting services to over 210 publicly and privately held midsize organizations in Michigan and nationwide. “We are happy to have our local MMA benefits team consolidated into one location,” said Thomas McGraw, president of McGraw Wentworth. “We have already begun working together on several initiatives, but combining our staff into one location provides management efficiencies and fosters an even greater sense of teamwork.” “Our team structure and skillset fits well with McGraw Wentworth’s service model. Combining our teams into one office simply expands the resources and expertise that we can offer all of our clients,” said Mr. Scoggin, co-founder of Great Lakes Employee Benefit Services, now an account director with McGraw Wentworth.