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New options on the employee benefits horizon not too pricey

For the most part, the types of employee benefits offered don’t vary that much from year to year. But there are a few new options on the horizon, including a few that don’t cost much to provide. For example, there is a new ROTH option for companies that offer 401(k) plans.

“It’s basically like a ROTH IRA except it’s done through an employer’s 401(k) plan,” said Tara C. May, CPA, senior manager for employee benefit services for Horne, LLP, in Jackson. “It’s a new option available to 401(k) plans beginning January 1, 2006. Unlike the ROTH IRA, there are no income limitations to a participant who wants to do the ROTH option in the 401(k) plan. So, if you have a higher paid employee who was unable to do a ROTH IRA because of their income level, they would now be able to do it through a 401(k) plan. If the participant meets certain requirements, they can withdraw the entire ROTH 401(k) balance, including earnings, and not pay taxes on the withdrawal.”

May said the employee’s contribution is after-tax, but the earnings would be tax free, upon meeting certain requirements. It does involve the employer amending the plan document, and there may be minimal accounting charges for the account.

“Overall, it could be an extremely valuable estate planning tool for a plan participant, in the right situation, for little cost to the employer,” May said.

At your discretion

At SouthGroup Insurance Services in Jackson, there is no sick leave any more. Instead, employees have 10 days per year of discretionary time. These are days taken above and beyond vacation time, and can be taken for any reason.

“That is a little unusual employee benefit,” said Robert Tubertini, president of SouthGroup Insurance Services, which owns SouthGroup Benefits Consultants. “There are two benefits: They don’t have to get sick to use it. And if they don’t take the discretionary days, we pay them a bonus based on their daily rate of pay. We think this program is as much a benefit to us as it is to our employees. The company benefits when people are present. Paying for unused discretionary days encourages people to be present, and we benefit from that. We think it is of mutual benefit. We have 140 employees, and that mutual benefit can add up.”

Another inexpensive benefit is cafeteria plans. Perhaps the company offers health but not dental insurance. With a cafeteria plan, an employee can purchase dental insurance and pay for that on a pre-tax basis.

“Many companies today are looking at cafeteria plans to offer that pre-tax benefit to employees,” Tubertini said. “Also, some companies allow things like payment for child care through their cafeteria plan. There are options. Our company pays 100% of employee medical insurance cost, and we have an array of benefits through the cafeteria plan that employees can buy on a group basis, using cafeteria. Those savings can really add up. Anytime you can buy something before taxes, it is a benefit.”

Getting direct

Another benefit that is popular with employees is direct deposit of paychecks.

Direct deposit of payroll for the employer is a convenience, but it does have its costs, said Susan Cucullu, senior regional marketing officer for Regions Bank, Greater Mississippi, Hattiesburg.

“Depending on the number of checks written, the frequency and the type of business account the customer has, direct deposit can be a viable alternative to check writing,” Cucullu said. “For example, a small business with 10 employees that has payroll twice a month may not find the same benefit as the small business with 50 employees with a weekly payroll. Each business would have to determine how much time and money is spent, preparing and distributing checks to determine the actual benefit to the company.”

In today’s environment, the name of the game is convenience. Cucullu said with direct deposit a person can be on vacation out of the country and still receive a paycheck automatically and have use of the funds without interruption because of the convenience of deposit.

The types of employee benefits can vary depending on a variety of factors and the type of business. But other types of benefits can include company discounts, parking privileges, business cards, employee picnics or other types of outings, financial assistance with continuing education, interest free computer loans, and allowing staff a limited number of hours of regular pay for community service.

Contact MBJ contributing writer Becky Gillette at bgillette@bellsouth.net.


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