Celebrating 30 Years of Serving Government Contractors

Fringe Benefit Group is celebrating a huge milestone this month: 30 years of serving government contractors.

In 1983, Larry and Alice West started the business with one other employee – Paula Johnson. Today the company has over 100 employees. There have been many changes in the past 30 years, but the company’s focus on providing value for contractors who work on prevailing wage projects has never wavered.

We’ll be posting more information on the history Fringe Benefit Group and The Contractors Plan in future blogs and on our social media sites through the end of the month.

Thank you to all our clients and employees for 30 wonderful years!

Retirement Plan Fiduciaries – and What it All Means

A company’s retirement plan can have several individuals and/or committees whose actions make them fiduciaries. These are named in the plan document.

The different fiduciary roles include:

• 3(21) Fiduciary: Generally responsible for retaining, evaluating and monitoring all fiduciaries of, and service providers to, the plan. The 3(21) Fiduciary can be given total discretion over a plan and can be the “Named Fiduciary”.
• 3(16) Administrator:  Coordinates communications among the plan, the participants, and the government. The 3(16) Administrator is responsible for signing the 5500. The 3(16) Fiduciary could be the “Named Fiduciary” or the “Named Plan Administrator”.
• 403(a) Trustee: Responsible for operating and investing the plan assets according to the plan’s trust provisions. The 403(a) Trustee may be a discretionary trustee. The 403(a) Trustee may also be a “directed” trustee, meaning it receives direction from the participants, a designated 3(21) investment fiduciary, or designated 3(38) investment manager. Directed trustees generally accept very limited or no fiduciary responsibility.

What is a Named Fiduciary?
You’ll notice that the term “named fiduciary” appears in both the 3(21) Fiduciary and 3(16) Plan Administrator paragraphs above. The named fiduciary is the person or entity with whom the buck stops when it comes to your retirement plan. The named fiduciary is responsible for management and operations of the plan, and bears liability for ensuring that the plan is run according to ERISA, IRS Code, and the provisions of the plan document.

Offered and Accepted
It’s crucial that you have documentation that the named fiduciary for your retirement plan has accepted, in writing, these responsibilities.

What Does This All Mean for Me?
Choosing the right fiduciary (or fiduciaries) for your retirement plan is critical. Working with a provider that understands this, and structures your retirement plan in a way that minimizes risk can greatly simplify this process.

In our next blog, we’ll cover some of the issues to consider when vetting fiduciaries.
For a complimentary risk analysis of your company’s risk exposure, contact us.

Year-End Checklist for Government Contractors

As 2013 draws to a close, it’s a good time for government contractors to review their prevailing wage benefits plans and make adjustments for the year ahead.

While this isn’t a comprehensive list, it gives you a starting point to work from and will put you in front of any changes you need to make to maximize your plan’s benefits for your company and your employees.

1. If needed, make plan amendments to allow for profit-sharing contributions for 2013.  If you think you’d like to make profit-sharing contributions to your employees’ 401(k) plans for 2013, and your current plan document does not allow them, the amendment must be made by year-end.
2.  Contact a retirement plan provider that specializes in prevailing wage plans for a fiduciary liability review.  If you are a company owner or officer, and your company offers a retirement plan for its workers, more than likely you are a fiduciary for the plan. Surprised? Most business owners are. A benefits provider that specializes in prevailing wage retirement plans can structure the plan to reduce your fiduciary liability and protect your personal and company assets.
3. Do a plan review. The only constant is change. Is your plan document consistent with how your plan operates? Benefits providers that specialize in prevailing wage plan design can review your plan document and suggest changes that may improve it. Prevailing wage experts will also be able to tell you whether your plan document language is compliant with federal regulations. A traditional benefits provider is likely to be unfamiliar with the special provisions that apply to prevailing wage plans.
4. Create an Affordable Care Act Strategy. Does it seem like 2013 went by at warp speed? Then 2014 won’t be any different. If your company will be subject to the provisions of the Affordable Care Act January 1, 2015, this is the time to develop your compliance strategy.
5. Review Changes Which Affect Health Insurance Plan Design.  Full implementation of the Affordable Care Act has significant impact on plan design beginning January 1st.
   • Pre-existing condition exclusions are no longer permitted.
   • Grandfathered plans will no longer be permitted to exclude adult children who have health care coverage under the child’s employer’s plan.
   • Waiting periods greater than 90 days will no longer be permitted.
   • Annual limits on the dollar amount of “essential health benefits” for any individual are prohibited.
   • “Limited benefit” or “mini-med” plans and stand-alone health reimbursement accounts (HRAs) cannot be maintained after the 2013 plan year.
   • Non-grandfathered plans must provide coverage for certain clinical trials and cannot deny or limit coverage of routine patient costs for items and services furnished in connection with the trial, or discriminate against an individual based on participation in the trial.
   • Non-grandfathered, fully-insured plans offering coverage in the individual or small group market must provide “essential health benefits.”
   •  Maximum out-of-pocket limits (for 2014 these maximums are $6,350 for self-only coverage and $12,700 for family coverage).
   • Annual deductible may not exceed $2,000/$4,000 (as adjusted).
   • Transitional reinsurance fees will be imposed.
   • Employers may choose to allow Health FSA participants to carry over up to $500 of any unused balance at the end of a plan year to the immediately following plan year. This is only allowed if the Plan does not offer a “grace period”.

Interested in a review of your fiduciary liability and/or plan design? Contact us. We’ve specialized in benefits plans for government contractors for 30 years, and we have the expertise to ensure that your benefits plan both complies with applicable laws and works to the best advantage for your company and your prevailing wage employees.

Who’s Your Fiduciary?

If you’re a company owner or officer, and your company offers its employees a retirement plan, there’s a good chance you are a plan fiduciary. And while there’s been much discussion of fiduciary roles and responsibilities in the investment adviser community in the past few years, the fact is that many company owners are unaware that they are a fiduciary for their company retirement plan and don’t understand the potential risks and responsibilities associated.

What’s a Fiduciary?
When it comes to a retirement plan for employees, the DOL states:  “Using discretion in administering and managing a plan or controlling the plan’s assets makes that person a fiduciary to the extent of that discretion or control.”

Why is it a Big Deal?
In a word: liability. The Supreme Court has ruled that retirement plan participants can sue plan fiduciaries under ERISA to recover investment losses to their 401(k) accounts. Employees can also file lawsuits claiming that plan fiduciaries did not disclose all administrative fees deducted from participant accounts, and paid compensation to the plan recordkeeper that was more than “reasonable”.

More than 30 lawsuits have been filed against plan sponsors in the past few years, including several national class action cases. While this may not seem like a large number, it does point to the need for retirement plan fiduciaries to understand the responsibility they are assuming and for companies to structure their plans in a way that mitigates risk.

So What Should I Do?
Over the course of the next several weeks, we’ll publish a series of blogs addressing the issue of being a plan fiduciary  and how to minimize risk for the company and its owners. Check back every Friday for more information

For now, check your retirement plan document to see who is named as the plan fiduciary. The tricky thing is, there are several types of fiduciaries that can be associated with a retirement plan. That’s one of the issues we’ll address.

For a complimentary risk analysis of your company’s risk exposure, contact us.

IRS Announces Retirement Contribution Limits for 2014

The IRS recently announced 2014 tax year limitations for several retirement related contributions. The amounts individuals can contribute to their 401(k) and IRAs remains unchanged for 2014. A full outline of the guidelines for tax year 2014 can be found here: http://www.irs.gov/uac/IRS-Announces-2014-Pension-Plan-Limitations;-Taxpayers-May-Contribute-up-to-$17,500-to-their-401(k)-plans-in-2014.

Austin City Council Requires Prevailing Wage on Projects Receiving Incentives

The city of Austin recently took action requiring that projects receiving incentives pay prevailing wages to workers on those projects. Read more about the decision here.

How the Government Shutdown Affects Government Contractors

Perhaps the most obvious impact of the federal government’s shut down is on government employees. But the economic consequences of the Congressional impasse on budget matters are far-reaching, trickling down to federal government contractors and the private sector.

For government contractors who are working on existing contracts, the effects of the shutdown depends on “the type of contract, (e.g., indefinite-quantity), the nature of the goods or services being procured (e.g., construction), and the facts and circumstances of the case.”

Indefinite quantity contracts generally permit the government to stop ordering goods or services once the guaranteed minimum has been ordered. Most government contracts include clauses which permit the government to reduce work performed under a contract, including the quantity of goods or services provided. Contracts may also include clauses which allow for suspension or delay of work by the government, or permit the government to order the contractor to stop work. The government may also terminate part or all of a contract, and cancel multi-year contracts. In some cases, contractors who are affected may be entitled to an adjustment, other compensation, or an extension of time to perform the work.

For contractors who have submitted bids on government contracts which have not yet been awarded, government agencies have no obligation to go forward with the contracts, even if solicitations have been sent.

This impacts hundreds of thousands of workers in the private sector – from the subcontractor who works on a construction project to the company that provides security at a federal building. But that’s not where it stops.

Say, for example, a family owns a diner near a federal building. During the time the government is shut down, no one is visiting the diner for lunch. Therefore the owners are not purchasing supplies to make improvements . . . and on and on.

It’s hard to say what the impact will be if Congress and the President don’t reach an agreement soon, but with the financial effects being felt already, we can be certain the shutdown will continue to pose challenges for all of us in one form or another.

Government Contractors: It’s Time to Get Out of That Simple IRA

Traditional retirement plans just don’t work for government contractors. If your company uses a SIMPLE IRA, you need to make changes NOW to ensure compliance and maximize your plan.

• SIMPLE IRAs have significant limitations when it comes to prevailing wage projects
• SIMPLE IRAs cannot be used in conjunction with a prevailing wage plan or any other retirement plan

November 1^st is the deadline for making changes to your SIMPLE IRA.  The IRS requires that employees be notified of a SIMPLE plan termination before the 60-day enrollment period for 2014.

If you’re not utilizing a retirement plan provider that specializes in working with prevailing wage contractors, you’re likely not getting the most from your plan. As a business owner, are you limited as to the amount you can put away for retirement? Are you getting refunds? Having trouble with non-discrimination testing? It’s time to work with a provider who understands government contractors and prevailing wage laws.

Using the fringe to provide benefits for your hourly workers on government contracts can also reduce your payroll burden by 6.5% or more. Contact us at 1-800-328-1519 for more information on how to make your retirement plan work for your business and your employees and compliant with government regs.

DOL Pushes Back Fiduciary Proposal

According to a recent article on financial-planning.com, the Department of Labor is pushing back the date for releasing a proposal which would expand fiduciary responsibilities for advisors who work with retirement plans.

Phyllis Borzi, the Labor Department’s assistant secretary for the Employee Benefit Security Administration, is quoted in the article a s saying that the DOL is “more concerned about getting it right than delivering it in on the previously announced schedule”.  You can read the entire article here.

Compliance Begins With the Bid

In a recent article featured on Lexology.com, attorney Eric Su discusses the fact that compliance with prevailing wage laws and regulations begins with the bid. Su writes:

“Prior to bidding for the work, contractors must review the bid documents to ascertain the specific prevailing wage requirements governing the project(s) for which bids are being submitted. When in doubt, contractors should consult their counsel or the contracting officers and local labor departments to ascertain their wage and hour obligations.

Contractors should never prepare or submit any bids without a complete awareness of the prevailing wage requirements governing their targeted projects. Competitive bidding is a statutory requirement for most public improvements, and Sandy reconstruction work is no exception. Statutes generally require public contracts to be awarded to the lowest responsive bid submitted by a responsible bidder. Compliance with prevailing wage requirements has a profound effect on both the responsiveness of the bid and the responsibility status of the contractor. These terms are defined as follows.

What is a “responsible bidder”? A responsible bidder is one who is fiscally responsible, trustworthy, and of the utmost integrity. A contractor’s responsibility status is established through the contractor’s experience in performing public works contracts and the general business integrity and credit worthiness of the company and its owners and officers, disclosed through periodic vendor disclosures filed with the federal government. Contractors are required to disclose any ongoing or prior investigations over prevailing wage compliance and findings of prevailing wage violations by the contractor and any companies owned or controlled by the contractor’s owners or officers.

What is a “responsive bid”? A responsive bid is one that strictly complies with bid instructions. A bid that fails to factor in the required prevailing wage rates will, in most instances, be deemed unresponsive, since bid instructions generally require the application of prevailing wage rates. A bid that has been determined as non-responsive will have a substantial negative effect on a contractor’s responsibility status and the contractor will have to notify contract agencies of the non-responsive determinations in vendor disclosures. This will have a direct negative effect on the contractor’s bid eligibility for future public contracts.”

You can view the entire article here.