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Anatomy of an EmploymentAgreement--Inclu... > Other Key Terms of the Employment Ag... - Pg. 103

Staffing Up Retirement Plans 103 Since more people under 40 believe in aliens than that social security will be around for them to collect, retirement plans are a hot button. The small employer's three big concerns are: 1. 2. Keeping administrative costs low. Maintaining flexibility about how much and whether to match or contribute to the employee's plan. There are several types of tax-advantaged plans to help your employees contribute pre- tax dollars to a retirement account, summarized in the table at the end of this chapter. Availability of vesting. Unfortunately, the more flexible plans designed for small businesses do not allow for vesting of retirement plans, so when an employee leaves, he takes everything with him. Some businesses respond to this problem by waiting a certain amount of time (one or two years) before enrolling an employee in the retirement plan program, but this can lead to bitter feelings by the employee. Note 3. TIP Take a look at the availability of a cafeteria (Section 125) plan for yourbusiness. Cafeteria plans help youmaximize your benefit dollars byallowing employees to choose theirown benefits (like you choose yourfood in a cafeteria), funded with somemix of your money and withheldsalary.While they can be difficult toadminister and must meet legal hurdles, the result is tax-advantaged foryou (no FICA) and for them, sincethey pay with pre-tax dollars. Performance-Based Compensation If the company awards bonuses, it will often be from a bonus pool , a fund--usually taken from royalties--set aside in accounting for division among the employees. The company should state