For most organizations, compensation is one of the largest expenses. Therefore, it is important to carefully plan your organization’s compensation strategy to both maximize benefits to employees and further the goals the organization.
Compensation planning goes far beyond the salaries your employees receive. Compensation is comprised of salary, bonuses, benefits, retirement offerings and fringe benefits, and each component must be managed carefully. Compensation planning takes a detailed look at each of the components of a compensation package to ensure an organization is maximizing benefits while staying in compliance.
Your company’s 401(k) plan provides many benefits for employees, most importantly the ability the grow wealth and retirement savings, tax deferred. Setting up a 401(k) plan provides an attractive benefit for both current and future employees.
While setting up a 401(k) plan is relatively easy, it also carries a significant responsibility. It is important that the plan meet all federal requirements including:
The compensation planning team at Smolin has decades of experience in advising clients in developing and implicating 401(k) plans to meet the ERISA specific needs. It is not recommended that an organization attempt to create a plan without professional assistance. Missing a crucial step can have costly implications for your organization and its employees.
As the company grows, your organization’s fiduciary requirements in regards to your 401(k) plan will also change. Once the number of eligible participants in your company’s plan reaches 100, federal requirements dictate the plan must be audited annually. There are strict guidelines regarding when audits must occur and what must be examined by the auditors. Audits must be performed by an independent accounting firm and are required to review:
The Smolin team provides quality ERISA auditing services to ensure your organization’s 401(k) plans are in compliance.
Qualified plans are retirement plans that are recognized by the IRS. This designation allows contributions by the company and employee to be made on a pre-tax basis. This means that funds placed into a qualified plan are not taxed at the time of the contribution. Instead, proceeds of the plan are taxed when they are withdrawn.
There are two distinctive forms of qualified plans:
Qualified plans are available in a number of ways, each of which offers a different methodology for funding retirement savings. Common qualified plans for smaller businesses include:
All qualified plans require annual filing with the IRS. While audits are only required after a plan is seen as being “large”, it is important to maintain detailed records in the event of an audit.
Working with expert, professional consultants who focus on compensation planning provides your organization with the foundation it needs to provide qualified plans as benefits while remaining fully compliant.
A key aspect of compensation planning is the creation of an executive compensation plan. Executive compensation must attract quality talent while protecting the organization’s financial standing. Executive compensation planning should include:
Smolin offers compensation planning services that are tailored to the unique needs of your organization. Receive additional information on how compensation planning can benefit your organization by contacting Smolin today.