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Is my DEFINED BENEFIT PLAN safe if my employer goes out of business? – Asset Protection

May 16, 2012 By Leave a Comment

If your employer goes out of business, any retirement plan your employer sponsored will be terminated. If the plan is a 401(k) or other defined contribution plan, your benefits are held in trust, apart from your employer’s assets, and you’ll generally be entitled to receive your full account balance in a lump sum. (You can take the cash, or roll your payout into an IRA or another employer’s plan.)

But if your employer sponsors a defined benefit plan, it gets a little more complicated. A defined benefit plan promises to pay you a specific monthly benefit at retirement. While defined benefit plan assets are also held in trust (or insurance contracts), apart from your employer’s assets, whether a particular plan has enough cash to pay promised benefits depends on your employer’s contributions and the plan’s investment earnings and actuarial experience.

When a defined benefit plan is about to terminate, the Pension Benefit Guaranty Corporation (PBGC), a federal agency created specifically to protect employees covered by these plans, is notified. If the plan has enough money to cover all benefits that participants have accrued up to the plan termination date, then the PBGC will permit a “standard termination,” and your employer will either purchase an annuity from an insurance company (which will provide lifetime benefits when you retire) or, if your plan permits, let you choose a lump-sum equivalent.

However, if the plan doesn’t have enough money to pay all promised benefits earned up until plan termination (that is, the plan is “underfunded”), the PBGC will take over the plan as trustee in a “distress termination,” and assume the obligation to pay basic plan benefits up to legal limits. For plans ending in 2012, the maximum annual benefit (payable as a single life annuity) is $55,840 for a worker who retires at age 65. If you begin receiving payments before age 65, or if your pension includes benefits for a survivor or other beneficiary, or if your plan was adopted (or amended to increase benefits) within five years of the termination, the maximum amount is lower. According to the PBGC, only 16% of retirees in recent years have seen their benefit reduced because of the annual dollar limits.

 My thanks to my friend Mike Stolp, Managing Member CFO Financial Advisor Network, for sharing this info and alowing us to use it here.  Contact Mike and his advsiory team at 800-283-2468   or learn more about him here: cfofa.com
Filed Under: Bankruptcy, business legal planning, CEO, closely held business, defined benefit plans, doctor sued, family business, financial advisors, FINANCIAL ISSUES FOR DOCTORS, financial literacy, high net worth, investment exposure, Legal Strategies, liability Tagged With: , , , , , , , , ,

From Success to Significance – A Holistic CEO Approach for Your Business

November 29, 2011 By Leave a Comment

We’ve featured articles on a variety of business and legal issues including many on dealing with the current realities of the market and the economy and what those realities mean for our many business owner and executive clients. In this multi-part article two expert management and organizational development consultants, Charlie Tombazian and Dean Newlund share some of the ideas they implement for successful businesses and their leaders. – Ike Devji 

Charlie Tombazian, Principal, S2S Leadership

These days everyone seems to be talking about “the new normal.” We see it in blogs, business journals and newspapers. We hear the chatter in executive forums, networking meetings, and around boardroom tables. Common questions that define this new business environment are: 

  • How has the recession changed the rules of business?
  • Have my customers’ expectations shifted?
  • Are my employees looking for jobs elsewhere?
  • How can we avoid missteps from the past?

  

The events of 2008 and 2009 shook U.S. businesses at their very core. And, it’s natural to focus on who to blame for this pervasive mess. We might as well admit we have all played some role in this country’s problems, and focus on how to avoid missteps in the future. We each must come to terms with our “new normal.”  

  

Next, let’s take the perspective that business, more so than any other social institution (religious, political, civic), is the driving force for advancing and evolving human behavior. As business owners and leaders we can determine how our customers, markets, supply chains, and employees have permanently shifted, and then adapt accordingly. We all know that adapting well will only guarantee survival. Identifying new, innovative strategies based on the new rules of the game will propel our businesses beyond survival to Success and Significance. As futurist Joel Barker said, “Our past success will guarantee nothing in the future. We must challenge old rules and paradigms, and create a new path to the future.” 

Startling Data Sheds Light  

Up until now, U.S. businesses, spurred by Wall Street’s mantra for quarterly growth, measured success primarily in economic terms. Most often success was defined by profit, return on investment, market share or economic value. Economic success can be influenced by hidden factors. Recent studies, such as from Gallop and IBM, clearly show economic success, employee engagement, and community connectedness are interconnected to one another. 

Note these startling statistics: 

  • Sick days at an average salary result in a $200 loss in productivity/day
  • 28% of employees are engaged, and they are twice as likely to thrive in their lives overall compared to disengaged employees.
  • The U.S. ranks first in productivity of its labor force measured by GDP per capita but 9th in productivity per hour worked. Today Americans work an average of 163 more hours per year than they did two decades ago!
  • Disengaged employees are twice as likely to experience depression, heart attack, and other stress-related maladies as engaged employees.
  • People with high quality friendships are 7 x more engaged in their work.
  • Total shareholder return is 19%- 22% higher in companies with high employee engagement vs. companies with low engagement.

The number of companies with declining employee engagement is on the rise. What are we doing to ourselves? Isn’t there more to life than an endless grind for economic success? 

 Redefining What We Measure  

Many now are redefining “Success.” Profit is critical for every business—it is the fuel that enables our companies to operate and grow. A car needs fuel to run, just like a business. But does the car exist for gasoline? No. Nor do our businesses exist for Profit. The purpose of a business is to provide a product or service people need or want. 

It’s easy to see that our single-minded focus on profit is at least partially responsible for the mess we are in today. We don’t suggest leaders substitute other worthy goals for profit. But we do suggest you include more than profit in your definition of success. 

Consider what a growing number of companies are doing by focusing on profit AND two other worthy goal categories—People and Planet. We propose incorporating a broader approach, using a “triple bottom line” of People, Profits and Planet. When we shift to a more “balanced scorecard” in defining and measuring business success, building a company becomes more significant. Why not create a company that is committed to: 

  1. Meaningful work
  2. Sustainability
  3. Business Social Responsibility
  4. Work-life balance

From Success To Significance  

It’s all about taking the journey beyond economic success to significance (S2S) through this triple bottom-line approach. The journey requires a willingness to change, openness to new ideas and models, commitment, discipline and perseverance. Once on this journey, you will develop new skills, inspire others, create significant impacts with and for your people, customers, community and the planet at large. Personally, you will take the new normal and build something successful and significant. 

Dean Newlund  

As CEO of Mission Facilitators International Inc., Dean Newlund is passionate about individual, team and organizational transformation, and therefore, spends most of his time conducting strategic planning sessions, facilitating team discussions on their leadership and redesigning their culture, and coaching executives on their leadership. Dean speaks and trains internationally and his monthly column “Leadership Exchange” can be found in AZ Magazine. www.missionfacilitators.com  

Charlie Tombazian 

Charlie is President, Innovative Strategies LLC, a Scottsdale, AZ-based management consulting firm specializing in customer experience improvement, differentiating strategy creation and leadership development. From 2000-09, Charlie was VP, Voice of the Customer Office, and Director, Global Strategic Planning at Avnet, the Fortune 150 technology distributor. www.myinnovativestrategies.com 

Dean Newlund, CEO of Mission Facilitators International Inc

Filed Under: arizona economy, business survival, CEO, closely held business, economy, family business, Leadership & Management, marketing and reputataion management, recession survival Tagged With: , , , , , , , , ,

Seven Legal Survival Tips for the Office Holiday Party – Asset Protection

November 28, 2011 By 1 Comment

This week marks the traditional start of the holiday party season for many businesses and most readers will attend multiple holiday parties and perhaps even host one or more. Attending a few of these events myself I’m always surprised to see employers with exemplary employee interaction throw all caution to the wind at this time of year, often with unpleasant results. While I certainly don’t want to scare you out of having a party and sharing the holiday spirit with your valued employees, we must address the way people really behave at these events and what it means for your practice.

As discussed in previous columns, employee liability is a major issue that we are always trying to be proactive about. Most employment liability centers around a lack of clear rules and procedures and perhaps most importantly, a set of well enforced behavioral expectations that they support. Below are some simple tips and issues to consider when planning your party. 

Invite your “guests” — don’t require their attendance.
Make it clear that the party is an optional perk, not a required work activity that is linked to their job requirements. If they are required to attend it raises your liability.

Lead by example.
“The boss” or some kind of hall monitor being present goes a long way. Be friendly and collegial but control your drinking, get people to eat, and make sure someone is clearly in charge and visible as the host. Many of our clients have been involved in lawsuits related to the conduct of their partners while everyone was making sure the guests were behaving. The rules apply to everyone, especially you and all management.

Set the tone with a dress code.
Make sure your colleagues and employees understand that this is a business event, not a nightclub atmosphere. Encourage appropriate dress for the event and set guidelines if you know some attending may dress in a manner that is inappropriate or overly suggestive. Communicate it clearly and in advance so your guests are not surprised or embarrassed.

Feed them first.
Put some food in your guests, before the drinks are really flowing if possible. This will keep them busy, slow their drinking and help ensure they don’t drink until they are full.

Control and limit the booze.
It’s not realistic to expect that many offices will abstain from serving alchohol completely, but this is the number one source of problems at most parties. Remember that you are responsible for just about everything that happens during and even after the party, including liability for those who may injure themselves or others (even people not in attendance) as a result of excessive drinking or as their lawyer will put it, “being over served.” You can do this by limiting service hours at the bar, providing drink tickets for a specific reasonable number of drinks, or by having the drinks passed and served at intervals.

Consider the venue and limit access if it’s at the office.
During the day everyone knows where they are allowed to be and what is and is not appropriate, the lines get blurred after a few cocktails. Consider hosting your party off-site. It’s often more fun and helps transfer liability on some issues to the “professional” hosts at a restaurant or other venue. Make sure the venue itself does not create additional liabilities or an environment that may promote inappropriate contact or behavior or excessive consumption; cross the “Home of the Barber Shop Shot Chair and Mechanical Bull” bar off your list. If logistics don’t allow that, limit access to the office and request that the computers not be used. The last thing you want to happen is to have four employees gather in a cubicle watching Internet porn (true story). Make sure that items that are sensitive, controlled, or dangerous are off limits and inaccessible. Remember that you may have strangers in your office like caterers or delivery people and that no one will be watching them.

Have a good time.
Have some genuine fun and make sure others are doing the same. We often see that “boring” parties create the most issues as people drink, fight, argue and gossip to keep themselves busy. On the other hand a well-organized party with a flow that keeps people talking, eating, moving, and interacting reduces the opportunity for much bad behavior.

Filed Under: Asset Protection, business legal planning, business survival, closely held business, dentists, doctor sued, Employment law, family business, liability, medical practice mangement, personal injury Tagged With: , , , , , , , , ,

How to Motivate and Retain Employees During Uncertain Economic Times

October 19, 2011 By Leave a Comment

Deanna Hagan

Michael LaVance

By Deanna Hagan and Michael LaVance

The U.S. Department of Labor recently announced that employers added only 18,000 new jobs in June, the fewest in nine months and far below the 100,000 predicted by analysts. The unemployment rate remained just over 9 percent, with more than 14 million people unemployed.

 This disappointing news may point to a slowdown or stall in the country’s economic recovery, with gas prices, natural disasters and local government layoffs compounding the issue.

 In this current environment of continued economic uncertainty, employers may be searching for ways to motivate and retain employees that go beyond bonuses and raises. There are a variety of tactics that employers can implement, including:

Strong leadership

Employees rely on company leadership for guidance and strategic direction. Key executives should clearly communicate the company’s goals, challenges, achievements, and other noteworthy information in order to best foster employee engagement. Employees want to know what is happening in their workplace, and how they can help make a positive contribution. Sharing this information with employees is an important part of fostering an environment of engagement, leading to greater employee productivity and retention.

Encouraging company leaders to meet with employees at all levels, not just those in management positions, can lead to enhanced morale and engagement as well. Whether it is face-to-face meetings or video chats, providing one-on-one time helps unify managers and their teams.

Effective communication

While some companies think employees should be protected from less favorable news, this often paves the way for rumors to disseminate throughout the organization.  This can lead to mistrust, which often results in top performers making the decision to leave the company.  According to a 2010 poll conducted by the Society for Human Resource Management (SHRM), 47 percent of HR professionals found that open communication demonstrated by leaders is one of the most effective tactics for retaining and rewarding employees.

Business owners can avoid workplace apprehension by openly communicating with employees and inviting them to contribute ideas and voice concerns.  Not only does this open dialogue, but it also helps employees to feel valued.  Business owners may also uncover good suggestions that may have otherwise gone unnoticed.

Competitive benefits

According to the 2010 Employee Benefits Survey Report conducted by SHRM, 72 percent of HR professionals reported that the benefits offerings at their organizations have been affected in some way by the economic recession.  The poll shows that organizations are looking for ways to manage costs while at the same time deal with the escalating expenses of employee benefits.  With the current economic climate, employers should consider that offering competitive benefits to employees is a key factor in retaining staff.

Career development

Providing employees with opportunities to broaden their skill sets and enhance their abilities is another way to foster engagement, including in-house training and external education programs.  These opportunities demonstrate a long-term commitment to employees that can translate to greater retention rates. For example, additional training courses can help employees boost their current performance and also allow them to acquire new skills that can help the company stay ahead of the competition.  Businesses should also consider leadership training as part of a comprehensive career-development program. 

Rewards and recognition

There are many effective incentive programs that demonstrate the value placed on employees, yet do not focus solely on huge raises, big bonuses or expensive prizes.  A weekly lunch drawing or casual dress workday can prove to be just as powerful when it comes to aligning employees with company goals. 

Recognizing individual achievements on a weekly or monthly basis can also help communicate an employee’s value.  Whether it is highlighting an employee at a company meeting or publishing an article on the company intranet, acknowledgement from company leadership has a long-lasting impact on the individual and the entire organization.

Now more than ever, business leaders need to retain their best employees to ensure the long-term success of their companies.  One way to do this is to make sure employees feel valued and know the company is dedicated to helping them achieve their personal goals.  Companies that invest in their employees by cultivating an open environment with opportunities to thrive will find that employees are more motivated, and more likely to stay with them for the long term.  

Deanna Hagan is a regional manager with Insperity for the Denver and Phoenix sales offices.  Michael LaVance is a business performance advisor with Insperity in one of its Phoenix sales offices.  Insperity (NYSE:  NSP), a trusted advisor to America’s best businesses for more than 25 years, provides an array of human resources and business solutions designed to help improve business performance. Insperity Business Performance Advisors offer the most comprehensive Workforce OptimizationTM solution in the marketplace that delivers administrative relief, better benefits, reduced liabilities and a systematic way to improve productivity.  Additional offerings include MidMarket SolutionsTM, Performance Management, Expense Management, Time and Attendance, Organizational Planning, Recruiting Services, Employment Screening, Retirement Services, Business Insurance and Technology Services. Insperity business performance solutions support more than 100,000 businesses with over 2 million employees.  With 2010 revenues in excess of $1.7 billion, Insperity operates in 55 offices throughout the United States.  For more information, call 800-465-3800 or visit http://www.insperity.com.

Filed Under: arizona economy, business survival, CEO, Employment law, family business, HR, recession, recession survival Tagged With: , , , , , , , , , ,