Benefits

What is an Summary Plan Description?

SPD is a Summary Plan Description. It is the employee benefit plan documentation that must be provided to all participants and beneficiaries that explains the basic rules of the plan in layperson’s terms. It contains descriptions of the rules for eligibility, participation, vesting, benefit calculation, benefit availability and how to file a claim for benefits. An SPD can be an important tool to understand your 401k or other retirement plan. According to the Department of Labor: The summary plan description is an important document that tells participants what the plan provides and how it operates. It provides information on when an employee...

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Fort Worth employment attorney explains what is FMLA

FMLA is the Family Medical Leave Act, a federal law that provides certain employees leave protections. FMLA provides twelve weeks of leave in a twelve month period. The twelve month period can bea fixed twelve month period, such as the calendar year, or a rolling twelve month period so the beginning of an FMLA leave starts a rolling twelve month period. To be eligible for FMLA leave your employer must employ at least fifty employees in at least twenty weeks in the year or prior year of the leave request. As a result, FMLA typically does not apply to small employers. FMLA...

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401k Participants Want Employer Help Saving for Retirement. No Kidding?

An article published early this year discussed a survey by State Street Global Advisors (SSgA) proudly boasted that 74% of participants in 401k plans want to better understand how their savings will pay off in retirement. This should come as no surprise. Most workers have little or no formal or informal education in investing. Thanks to shifts in the financial services industry in the 90s most workers no longer have pensions. Pensions allowed workers to do their jobs and let their employers manage the pension fund investments. With 401k plans and other defined contribution plans, employers have shifted the investment responsibility...

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New federal bills seeks to redefine what it means to be a full time employee

Under the Affordable Care Act (ACA) employers with fifty or more full time employees must provide health insurance to 95% of full time employees or pay a penalty. This "play or pay" provision has a lot of employers in a tizzy. Among the reasons is the ACA defines a full time employee at thirty hours per week. We often consider full time employment means forty (or more) hours of work per week. We see that idea expressed in the Fair Labor Standards Act (FLSA) as the threshold before employers must pay overtime pay. However, ACA set the threshold lower to include employers who work...

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How does an ESOP work? How does it work with a 401k plan?

An ESOP is an Employee Stock Ownership Plan. It is an ERISA-governed employee benefit plan that allows the employee to purchase shares of the employer’s stock on a tax deferred-basis. (You don’t pay taxes today but you will pay taxes when you take your money out of the plan.) ESOPs were common before the rise of 401k plans in the 1980s. Today it is common for employers to offer company stock in their 401k plans. The company stock in the 401k plan is often an ESOP within the 401k in a structure sometimes called KSOP. (For more information about KSOP plans...

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What can I do to dispute my benefit plan?

You may have many reasons to dispute your benefit plan, such as 401k or pension. You may disagree with the facts used to calculate your benefits, the formula used to calculate your benefits, an investment option or distribution opportunity denied. ERISA lays out a specific set of rules that plans must follow. You must comply as required by ERISA before the next step occurs. You cannot simply hire a Texas employment attorney and sue the plan. Also, you have to give the plan administrator an opportunity to review the decision and confirm its accuracy. Assuming you inquired about the focus of your...

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How secure are my pension payments?

A common concern posed by pension participants is how secure those payments will be in the future. Given the economic turmoil in the past few years, it is certainly a worthwhile question. The good news is that the vast majority of retirement benefits are more secure than you might think. As a Dallas employment attorney experienced with pension issues I can tell you this is a legitimate concern for employees and retirees. Pension benefits are not an easily understood issue. Plan rules are complex. The benefit formula for a pension plan is just as complex. The legal issues around pensions and...

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401k Plan Fees – What Are They and Do They Matter?

Employers operate 401k plans at a cost. Like other labor expenses (hiring process, salary, vacation pay, etc.) employers have to pay for compliance with labor and employment laws. Benefit plans are somewhat unique. Under ERISA employers can shift the cost of plan administration from the plan sponsor to plan beneficiaries. 401k plan fees often are handled through revenue sharing with the financial institution operating the plan in which the administrator selected funds that would absorb the costs of the plan. After years of federal litigation challenging whether employers could select higher fee funds to absorb plan costs, many 401k plans...

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What is ERISA and why should employees care?

ERISA, the Employee Retirement Income Security Act of 1974, is a federal regulatory regime that governs private employer retirement, health care benefits and certain other employee benefit plans. It is a massive web of legislation, Department of Labor regulations and IRS regulations. ERISA also borrows from and incorporates securities regulations on investments (such as in 401k plans). ERISA grew out of the bankruptcy of automobile manufacturer Studebaker in 1963. The bankrupted manufacturer could not afford to pay promised pension benefits. Many of its employees lost their jobs with little or no pension. ERISA rejected the idea that employees promised a pension worked on a whimsical...

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Should You Take the Lump Sum or the Annuity Payments from Your Pension?

This highly important question tends to receive significantly less attention in today’s economy than it should. Many people see a lump sum as a way to either pay down debts or seed stock gains. This attitude is further fueled by financial advisors who need to bring in assets, like your pension lump sum and 401k, to generate revenue. (You are most likely paying fees through asset-based management or advisory fees or as the sales charges on your purchases.) As an employment attorney who once worked employer-side with pension plans, I have discussed this question with a large number of retirees. Pension payment elections...

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Can I use my 401k to buy a business, franchise, house, investment property, etc.?

There are many retirement asset-funded investment and business schemes that run from taking loans to “rollover as business startup” (ROBS) plans. They have been around for many years and typically they are generally a bad idea. I discourage most would-be investors due to the legal and financial liability involved. I have had people come to my law firm from Fort Worth and Dallas looking for information about these types of 401k plans and as an employment attorneyI rarely find these plans a good idea. What are 401k rollover as business startup plans (ROBS plans)? These plans are concocted by financial professionals as a way...

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401k Fee Disclosure: What Does It All Mean?

401k fee disclosure was a project in the works for many years, going back to the mid-2000s. Eventually the Department of Labor promised Congress it would create regulations requiring plans to disclosure fees charged by service providers. The purposes are two-fold. First, disclosures help plan administrators figure costs so they can assess whether fees are reasonable and shop for better deals. Second, the disclosures to participants is meant to better inform participants what they are paying for and help them see the fees paid for the different investments in their plans so they could make investment decisions with those fees in...

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City of Fort Worth, Texas Continues to Struggle with Underfunded Pensions

Fort Worth hammered out a new contract for its police officers the city government continues to suffer under the ongoing problem of its underfunded pension plan for city employees. Fort Worth is not the only city with an underfunded pension on its books. This problem is widespread and even the Texas state pension plan for state employees is underfunded. The underfunded pension issue is not just a government employee problem. Studies of private defined benefit pension plans indicate private pensions typically only retain 81% funding and only 10% fully funded. The Fort Worth Retirement Fund maintains only 71% funding, 10%...

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