R&R Insurance Blog

For those of us in the Midwest, there is an uncomfortable reality that sets in about this time every year. Summer is reaching its waning days, and though Autumn is a favorite season for many of us we know all too well that Old Man Winter will not be far behind. But from a personal financial planning standpoint, this time of year does possess tremendous opportunity to make certain that we have not only done all of the things that we were supposed to do during the year, but that we were also intelligent in the manner that we did so.

With more than half of the year gone, we now can reflect on the things that we have done, and whether they have helped us to improve our situation. At the same time, however, there is still enough time to look at the things that still need to be done, and to make progress on them. What are the steps that you should be taking right now to ensure a successful finish to your year?

1. Retirement Plan opportunities – Every American with a 401(k) retirement plan at work possesses the opportunity to improve their financial security, and perhaps their income tax situation, simply by utilizing this benefit. In 2020, every American with a 401(k) can contribute up to $19,500, and those who have reached the age of 50 can contribute up to $26,000 for the current year. Even if those levels are not feasible, make sure that you are contributing enough to receive the full match from your employer at your current contribution. Simply bumping your current contribution by 2-3% can create a significant improvement in the long-term.
2. Flexible Spending Plans – If you are enjoying the benefits of a Flexible Spending Plan at work, either for Health Care or Child Care expenses, this is a great time to evaluate how much you have left to spend before year-end. This is critically important since these are “use it, or lose it” accounts, and unused dollars are wasted. If it looks like your medical reimbursements for the year appear lower, consider finding expenses to move into the current year so that you can use every last dollar. Need a new pair of eyeglasses? Move an annual checkup from January to December? Complete them prior to year-end and get them on the current year.
3. Schedule a planning meeting with your CPA – This year has been an incredibly challenging one for all, and more than ever it is a wise idea to spend 30-60 minutes with your CPA or tax preparer to review the expectations for the year. Collect your pay stubs, your investment information, and review your expenses and potential deductions, and get them to your accountant so that they can “mock up” your 2020 income tax return and provide educated projections. Should you expect a refund? Are you going to owe more than expected? Are there things that you can do now to improve the outcome? Don’t wait until April 15^th for an answer that is hard to stomach. (And if your CPA is not interested in planning ahead, you still have time to find a new one before the end of the year.)
4. Review your expenses and cash flow – “I spend how much on coffee?!” Let us face it, no matter how frugal we believe ourselves to be, we each have areas within our spending patterns that could likely be adjusted. Thanks to programs like Quicken and Mint, tracking these spending patterns is easier than ever. And with so many of us on automatic payments to our vendors, when was the last time that you really asked if you could get a better price? Do you qualify for your Satellite TV provider’s $50 monthly customer loyalty discount? Is your home security provider willing to reduce your current monthly fee since you do not use every benefit that your system has to offer? Is your pest control service willing to waive the December quarterly bill since wasps are not a huge problem around the pool when the snow is flying? If you don’t ask, the answer is always “no”.
5. Ask “What has changed?” – Life gets so busy at times that it is too easy to lose track of the changes that happen in a given year, and how those changes may impact us. Have you retired a mortgage? Has a child or grandchild graduated from high school (triggering new educational expenses) or college (creating less required spending)? Did you change jobs, and if so have you found the experience to be financially enabling, or is it creating new challenges? Has it forced you to rethink how you will approach your family’s health or insurance benefits when open enrollment comes up again in just a few short months? By taking the time to think through these issues now, you will find that you not only arrive at better answers, but that your stress level in getting there will be lower as well.

With as hard as you have worked this year to help your family to get ahead, don’t miss an opportunity to improve your situation with a few simple actions. The hour of time that you spend may pay you handsomely over the coming months, and should allow for many more nights of restful sleep along the way. Plan ahead, get ahead!

Majority of people have most likely heard of the Freshman 15. Young adults go off to college and the new environment change causes stress and unhealthy habits to develop which contributes to weight gain. A new trend during quarantine has been labeled the COVID-15; with a lack of socialization, food directly in sight and boredom on the mind, many have found themselves gaining a few extra pounds.

“In a poll of more than 1,000 U.S. readers of WebMD, half of women and almost one-quarter of men have reported weight gain since COVID.”

Even social media has been trending with taglines of weight gain, over-consumption of alcohol and poor nutritional choices. Unfortunately, those who struggled with weight issues, eating habits and socialization before now possess extra risk. So what can you do to take action against the COVID-15?

• Change your focus from frustration to optimism
• Adjust your environment by creating an office setting away from the couch and kitchen
• Try a new health meal or snack such as apples and almond butter or pretzels and hummus
• Skip the alcohol or soda and try sparkling water
• Shop smarter by making a detailed list, limit impulse buys, plan a week of meals ahead of time
• Get active outside by walking, hiking, running, etc.
• Seek help from a dietician, counselor or family when necessary

Look for the silver lining during these times and take healthy action in your life. Starting with the steps above will help you get right back on track.

As we navigate our new future, your business may currently be re-opening or considering how to move forward into the workplace again. With that said, you may be receiving an influx of remote work requests. Many businesses were faced to put technology and policies into place during COVID-19 regarding telecommute.  Some companies now know that working remote is possible for employees and may continue this way for safety measures, and childcare issues along with other personal reasons. On a positive note, some remote employees have reported being more productive plus reduced commute times are a major perk for longevity with a company.

Company Culture & Work/Life Balance

Among the pandemic, many companies are utilizing this time to rebuild a great culture. With virtual communication channels such as Zoom, employee intranets, email and more, culture can still shine even in a remote setting. Consider remodeling your culture to match not only your mission statement but a general theme. Maybe that theme is innovation, customer-centric, collaboration, respect, honesty, diversity—the list goes on. Remember you must gain leadership support and demonstration for culture to thrive.

Work/life balance must be instilled to prevent employee burnout regardless of telecommute or an office setting. Elevate and engage your employees by making appropriate workloads, facilitating communication, providing resources, celebrating success and encouraging appropriate work-life balance. It is impossible to eliminate work stress, however, by recognizing the burnout signs and providing resources your employees will feel appreciated. Continue to promote an Employee Assistance Program (EAP) line, if applicable, and other resources you find beneficial for your workforce. Ultimately, let your employees know you care and are thinking about their wellbeing during this time.

If employees have to return back to the workplace, measures must be taken to ensure one’s safety. Many companies have implemented the following:

• temperature screenings prior to entering the building
• removal of potluck style lunches
• plexi-glass in-between cubicles
• hand sanitizer and sanitation wipes readily available
• no meetings greater than 10 people
• a definite remote work strategy if an employee tests positive or a pandemic occurs again

These few items along with many others are important to implement and educate employees with the transition of coming back to the workplace.

So, what does wellness look like in the future?

A huge emphasis will be placed on mental health more than anything else. The National Alliance on Mental Illness is a great resource to start with in order to find helplines, education, research, discussion groups and much more. Many vendors are now implementing at home biometrics in case an on-site cannot occur or employers just feel more comfortable with this option.

Last but not least, more virtual doctors and therapy appointments will continue to increase. Overall, there are many items to consider if you are allowing employees to continue to work remote or come back to the workplace. Remember to frequent the CDC guidelines regarding Coronavirus and keep your employees needs at the forefront.

When you made the decision to set up your company’s 401(k) retirement savings plan, you carefully considered the investment options that your plan provider had available.  Your choices were likely based upon factors such as management style, historical performance, the types of asset classes necessary to offer true diversification, and the underlying investment costs to your employees. 

Now, when was the last time that you went back and looked at them again with that type of scrutiny? 

Well, if it was within the last year, and your process was thorough and documented, you are likely in good shape.  But if it has been two years or more since your last analysis, you are creating a risk that must be addressed.  As is true in so many areas nowadays, even the best intentions can create litigation risk when proper due diligence and procedures are not consistently followed.  What are the primary risks?

• Under-performance - Investment performance and rankings are always changing. Are the “top rated investments” that you originally picked still at the head of their class, or are they now lackluster shadows of what they once were?
• Unreasonable Costs - Are the investments that are offered cost effective as compared to their peers, or are you effectively forcing employees to utilize options that are now expensive as compared to other readily available options?
• Failure to Monitor - Within actively managed funds, investment managers at times tend to stray from their original investment goal. This “style drift” can result in stronger investment performance when effectively managed, but a failure to monitor these changes can create a lack of diversification and heighten investment risk.
• Excessive Proprietary Investment Use - Has your plan made substitutions in their offerings leaving your employees with fewer independent investment options, and a slate of proprietary offerings that are more generous to the investment management firm than to your employees.

Any one of these issues, combined with a disgruntled employee, could be enough to trigger civil or class action litigation.  The good news, however, is that there are effective ways to protect your company and your Plan Fiduciaries.

Has your Plan Advisor prepared and presented to you a full review of your company’s 401(k) Plan within the last 18 months?  If they have not, you should be asking why.  And if they are not, let us know and we would be happy to do so.

At R&R we are specialists in helping to protect you against risk, and to work with you to mitigate your risks as you grow.  Our in house Retirement Plan specialists are available to provide a complete review of your company’s Employer-Sponsored Retirement Plan, and to help you to understand what risks are present and how you should be working to address them.  There is no cost for this review service, and it requires only a modest investment of time and effort on your part.

You have the option to either work from the belief that your Retirement Plan is in good shape, or you can know for certain that it is.  Give us a call and let us provide you with greater peace of mind.  It’s what we do at R&R.

Audit.  The word alone is enough to give most Americans chest pain.  And while most equate the term with their personal income taxes, business owners and senior managers are also aware that the US Department or Labor can inflict an adverse reaction to their health with the word as well.  As such, it only makes sense to run your business in a manner that keeps you in the good graces of the DOL, and doesn’t raise any red flags.  Right?

Most would likely agree with that, and yet every year as we meet with our clients or new prospects we are surprised to see just how many companies are unknowingly leaving themselves at risk of triggering a DOL audit.  And it’s especially frustrating given how cost effective and simple the fix is.

As a company that provides a 401(k) plan to its employees, you are a Fiduciary and while that duty covers various aspects, none is more fundamental than protecting your employees’ assets against Fraud, Theft, or other acts of dishonesty.  This is such a fundamental tenet that the Employee Retirement Income Security Act of 1974 (ERISA) mandates that certain individuals who are responsible for the day-to-day administration of your 401(k) plan must be covered by Fidelity Bond.  Some basics:

• All 401(k) plans require a Fidelity Bond, with the notable exception of Solo 401(k) Plans
• A Plan’s Fidelity Bond is designed to bond each official tied to the Plan, and must be sufficient in size to bond each official for an amount of no less than 10% of the funds that they handle as of the first day of the Plan year (subject to a $1,000 minimum)
• Generally no plan is required to bond an amount higher than $500,000, however that cap increases if a plan holds Employer Stock
• Special rules also apply for plans that hold “non-qualifying assets” such as real estate or Limited Partnerships

Do you know if your plan is sufficiently bonded, or are your running the risk of facing a plan audit by the Department of Labor?  If you are uncertain, there is good news.  As your trusted partner in risk protection, R&R Insurance has the in-house resources and talent to help you to determine whether or not you are at risk for an insufficient 401(k) Plan Fidelity Bond, and the ability to help you correct it in a timely manner.  While this should be a primary discussion point at every single plan review meeting that you have with your 401(k) Plan Advisor, it too often is missed.  Don’t let a complacent plan advisor put you, your Plan Trustees, or your company at risk.

If your plan provider is NOT being proactive in helping you to make your 401(k) offering the most effective plan for your employees that it can be, contact your R&R Insurance Agent and let them know.  We have Professionals in the Insurance and Wealth Management areas who look forward to meeting with you to review your plan and provide specific guidance as to how to improve your plan and safeguard it against risk.

You made the commitment to provide the tools that your employees need to be successful, now let us put you in contact with the team that will provide the value that you should expect.

As an astute employer, you make investments in your employees in many ways.  You hire the best people that you can find and compensate them fairly.  You train them to excel at their position and to grow into new roles with greater responsibility.  And when you make the decision to invest the time and resources to offer them a high-quality retirement plan you are investing in the platform that will help them to build a lifetime of financial security. 

Few things though are more frustrating than when the employees that most need to work to build that security choose not to do so.  Compounding this frustration is that a lack of participation across your workforce can also create problems with your retirement plan’s non-discrimination testing at the end of the year, which can create an adverse result for those employees that are actively using the plan. 

When this issue arises in plans, there are a few steps that are recommended to help motivate and guide your employees to taking full advantage of the benefits that you have put into place.  Among them are:

1. Automatic enrollment of all employees into your plan. According to data provided by Vanguard’s small plan division, employee participation increased from 57% to 82% by simply defaulting employees into a plan, as opposed to waiting for them to enroll.
2. Automatically increasing deferral rates on an annual basis is one way to take employees from a relatively modest deferral to a healthy, meaningful contribution over time. After all, it’s great to have employees contribute 3% of their pay as compared to nothing, but a deferral rate that remains stagnant over time will likely not be sufficient to help your employees retire comfortably.
3. Making it easier for employees to increase their deferral rates as their financial situation improves is one of the surest ways to help employees them do so. Rather than filling out new forms and offering limited time windows to make changes, your platform should be set to offer your employees the opportunity with a few clicks of a mouse.  This is especially true for employees that see variances in their income from month-to-month or as a result of production incentives.
4. There is no substitute for quality education. How often does your plan provider spend time with your employees to help them to understand the opportunity that they have in plain, easy-to-understand language?  And does your plan advisor make themselves available in a way that encourages your employees to take responsibility for their future, or do they inadvertently dissuade them by them by being hard to reach?  Do not let a complacent provider diminish the value or your plan with poor service.

These are just a few of the different techniques that can be implemented into an existing plan to provide the encouragement that your employees need to get started, or to ramp up their efforts.  If your plan provider is NOT being proactive in helping you to make your 401(k) offering the most effective plan for your employees that it can be, contact your R&R Insurance Agent and let them know.  We have the Wealth Management talent and resources in-house who look forward to meeting with you to review your plan and provide specific guidance as to how to improve your plan.

You made the commitment to provide the tools that your employees need to be successful, now let us put you in contact with the team that will provide the value that you should expect.

It’s the phrase that no HR Manager or CFO wants to hear, “The retirement plan failed it’s Non-Discrimination Testing.”  For your management team it means extra work, and perhaps fines and excise taxes, but it has an even bigger downside.  You now have angry key employees who could begin to search for perceived greener pastures.

In the first fiscal quarter of every year, every company that offers a 401(k) plan to their employees is required to file documents and undergo mandatory compliance testing.  These “non-discrimination tests” are in place to ensure that a company’s retirement plan is fair to all employees, and not just those who are highly compensated.  For purpose of clarity, an employee is considered a Highly Compensated Employee (HCE) if they made more than $125,000 per year (in 2019) OR own at least 5% of the company.

What happens when your plan fails its test, and needs to be corrected?  The short-term corrective measure is to work with your plan provider to calculate the amount of money that your HCE’s have “over contributed,” and then the plan sends checks back to them for that amount.  While the company can face potential fines or excise taxes, the bigger concern for HR Directors is the backlash from the highly compensated folks who are about to receive their money back.  Why are they so upset?

• If the funds were deferred on a pre-tax basis, the correction has now increased the employee’s taxable income for the following year.
• The amount of “excess contribution” that was returned to your employees has now reduced your employee’s retirement investment base, leaving them with less to work with.
• Because their income is higher than most, your HCE’s likely cannot build a sufficient retirement asset base solely by maximizing their 401(k) plan contributions. By reducing their contribution limits, it only makes their task harder.
• Companies that fail this ACP/ADP testing too often fall into a pattern, and this becomes the norm.

But there is good news, this does NOT have to continue.  While you cannot undo the damage to employee morale from the previous year, you can correct the problem for the current year and demonstrate to your key employees that you are always looking out for them.

If your plan provider is NOT being proactive in helping you to make your 401(k) plan the most effective plan for your employees that it can be, contact your R&R Insurance Agent, and let them put you in contact with the in-house Wealth Management team that can make you a hero to your employees.  We are prepared to make a difference for your employees, and to make sure that they know that you are always watching out for their best interests.

With the stay-at-home order in effect until May 26^th  in Wisconsin, it is important to stay safe while running essential errands. If you must visit essential businesses such as the grocery store, pharmacy, or bank there are guidelines you can follow to remain healthy and limit your exposure risk.

First and foremost, if you feel ill always stay home. Otherwise, please follow these precautions from the Centers for Disease Control and Prevention (CDC):

• Order online or curbside pick for your items (if applicable) to limit in-person contact.
• If items cannot be ordered online, wear a cloth mask in public. Make sure it rests above your nose and covers your entire mouth.
• Disinfect high touch surfaces and items such as shopping cart, car steering wheel, purse, keys, etc.
• Avoid visiting the businesses at ‘rush hour’ times and utilize contact-less pay.
• Apply hand sanitizer with at least 60% alcohol and wash hands immediately upon returning home.
• Avoid touching your eyes, nose, and mouth.

If you are feeling stir-crazy, lonely or isolated there are still ways to help your community and provide safe social interaction. Consider donating blood, especially since supply is low. Blood donation is an essential service and proper health and safety precautions have been taken by blood centers.

You could support a local food pantry by donating items to fill their shelves. Many families are suffering from unemployment and rely on donations to support their family’s next meal.  Last but not least, don’t forget to practice self-care by eating well, exercising and obtaining 7-8 hours of adequate sleep. Stress levels may be heightened, but don’t forget to do things that will help you have a sound mind and body.

All in all, it is important to remain safe and healthy, so if you have to go out, please use these precautions accordingly.

Guidance for your business practices while navigating COVID-19

With all the information available, what actions should be taken to keep our employees well?  How can our company assure we implement an effective written plan to keep our employees safe without being overwhelming?

Follow these steps to implement an effective written infectious disease plan:

1. Exposure
   1. Understand the risk based on business type/job/position to determine complexity of your plan
   2. Conduct a hazard assessment, thinking about employees interaction with others that require
      1. Working within 6 feet physical distance and/or
      2. Share equipment, common space, vendor, customer etc.
2. Prevention
   1. Outline available measures to control the spread of germs until a vaccination is released using a hierarchy of injury prevention
      1. Substitution – work at home practices, temporary suspend some job functions, etc.
      2. Engineering – add physical barriers, increase air exchange, utilize high efficiency filters, etc.
      3. Administrative – sick at home policy, daily symptom monitoring, cleaning/disinfecting, stagger shifts/lunches, etc.
      4. Personal Protective Equipment – utilize face covers, exam masks, filtering face piece respirators i.e. N95, gloves, eye protection, face shields, etc. depending on the risk

3. Preparedness
   1. Determine resources needed and estimated time frame, various actions can be implement at different times to still remain effective i.e. revision to sick policy can be implemented before monitoring body temperature due to supply chain demands
   2. Develop a plan for positive employee test, i.e. trace contact, employee notice, deep disinfect, etc.
4. Response
   1. Outline company plan and review with leadership
   2. Conduct supervisor education of COVID-19 and company plan
   3. Communicate with employee company plan and leave room for modifications as needed, promote 2-way communication

Resources

• OSHA Guidance on Preparing Workplaces for COVID-19
• OSHA COVID-19
• CDC Interim Guidance for Businesses COVID-19
  • Contact R&R Insurance Services
• Looking for a risk assessment for your business operations
• Need assistance implementing best practice controls that match your risk
• Additional questions about your business situation and COVID-19

Guidance for your business practices while navigating COVID-19.

We never required masks before, what are the considerations from regulations (i.e., federal, state, local) to best practices?

Evaluate your business’ level of risk for exposure to COVID-19 according to OSHA. Think about the sequence of individual job duties, this will vary depending on the tasks that interact with others.

If within 6 feet of contact with others cannot be controlled through physical barrier guards, then some type of PPE that covers the mouth and nose is needed.  Also, if within 6 feet (close contact), then gloves and glasses should be part of the PPE approach to further protect against the spread of COVID-19.

Face Covers and Examination Masks

• Loose fitting (snug, but comfortable).
• They decrease spray of air molecules carrying the COVID-19 virus found in saliva that occurs while talking, coughing or sneezing.  Face covers and Examination or Surgical Masks are easily used in the marketplace, have multiple use, and accepted as good practice that is not regulated by OSHA. Face Covers can be hand washed.  Examination Masks are disposable and offer more protection.  Examination masks are more available for purchase every week.

N95 or Filtering Face Piece (FFP) Respirators

• Tight fitting and offer a higher protection against inhalation of air molecules carrying the COVID-19 Virus.  
• At this time, the supply of FFP Respirators are in short supply and should be reserved for first responders and healthcare workers.  This option (if you require your employees to wear FFP respirators) is regulated by OSHA and requires a written program, medical evaluation and annual fit testing.  At this time FFP can be sanitized up to 3 times using an approved process.

All nose/mouth PPE requires storage in a clean paper bag when not in use.  Inspection of the PPE should be done prior to each use by the employee.

Resources:

• Information for development of your business practices/educate employees CDC Face Covers CDC Examination Masks and N95 Respirators
• Contact R&R Insurance Services if you
  • Would like to discuss alternate strategies
  • Need clarification on using the right PPE
  • Looking for a PPE Assessment
  • Have additional questions about your business situation and COVID-19