ARTICLE - Employee Benefit Plan

Designing an Employee Benefit Plan

     When you begin to put together an employee benefit plan, you will likely want to start with a few “core” benefits, such as life insurance, health insurance, and a retirement plan. These benefits form a base from which your company’s benefit plan can grow and evolve in the future. Every year or two, it may be wise to consider the addition of a new benefit plan, for example dental insurance or disability income insurance. Instead of bearing the burden of cost entirely, you can contribute a portion of the cost, with your employees paying the balance.

     Before you add a new benefit to your existing employee benefit plan, it is always wise to survey your current employee population to see what benefits they would like added. For example, if your employee population is made up of younger, single employees without dependents, a dependent life insurance plan—one that would provide a benefit in the event of the death of an employee’s spouse or qualified dependent child—would be underutilized and, most likely, unappreciated. But, if your employee population is largely made up of thirty-somethings who are married and have children, the same dependent life insurance plan might be an excellent addition to your existing benefit plan. Remember that your employee benefit plan is not static. It must change and evolve with your company’s growth, profitability, and employee demographics, in order to be effective as a retention/recruitment tool.

Regulations

     Most employee benefit plans are federally regulated and have strict guidelines to follow, such as continuation of coverage rules for medical insurance, and rollover and distribution requirements for qualified defined benefit and defined contribution plans. 

     In order to avoid discrimination (and the potential for legal action), a benefit offered to one employee should be offered to all employees, regardless of race, age, gender, disability, and employment type. Employers must design employee benefit plans to comply with a number of federal statutes, including the Employee Retirement Income Security Act of 1974 (ERISA), the Age Discrimination in Employment Act (ADEA), the Older Workers Benefit Protection Act (OWBPA), the Civil Rights Act (CRA), the Consolidated Omnibus Budget Reconciliation Act (COBRA), and the Equal Pay Act (EPA). While employers may offer discriminatory benefits to their key employees, these benefits will be classified as “nonqualified” benefits, and the cost of providing them will not be deductible to the employer as other “qualified” benefits might be under the Internal Revenue Code (IRC).

Your Employees Depend on You

     As an employer, you have an obligation to provide your employees with compensation in exchange for work performed on your behalf. In addition, you have the opportunity to create an employee benefit plan that will improve the satisfaction of current employees and enhance recruitment efforts, as well as provide tax incentives for your company. A professional experienced in designing health, welfare, and pension plans can assist you in designing a plan that’s right for you and your employees, in addition to fitting in with your overall budgetary requirements.

This article appears courtesy of J. George Reilly. George is a Registered Representative offering securities through MetLife Securities, Inc. (MSI) (member FINRA/SIPC). Metropolitan Life Insurance Company (MLIC) 200 Park Ave. New York, NY 10166. MSI and MLIC are affiliates. George focuses on meeting the individual insurance and financial services needs of people in the small business market.  You can reach George at the office at 371 Hoes Lane, Suite 204, Piscataway, NJ 08854, 732-465-0899.
Copyright ? 2008 Liberty Publishing, Inc. All rights reserved. Reprinted with permission.     L10079969(exp1008)