Data and Research July 19, 2016

Financial Stress Affecting Workplace Productivity

Employees could use education about cash management, a survey shows.
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Financial Finesse, in its annual Financial Stress Research study, found that many workers are experiencing such stress and that it is having debilitating effects on their lives, including their work. The primary factor that determines a person’s financial stress level is cash management, and Financial Finesse found this skill varies widely among individuals.


Among people who have manageable financial stress, 80% have a handle on cash flow, 59% have an emergency fund, and 95% pay their bills on time. For those who have unmanageable financial stress, only 36% have a handle on cash flow, 16% have an emergency fund, and 67% pay their bills on time. Financial Finesse’s study found that 25% of workers experience high or overwhelming financial stress—but 85% of workers feel at least some level of financial stress.

Unmanageable stress levels, according to Financial Finesse, indicate that people feel helpless and are living paycheck to paycheck, with expenses exceeding their income and large debt balances.

Liz Davidson, CEO and founder of Financial Finesse, says her company has developed the “C.A.L.M.” model to help people get a handle on their finances. “C” stands for creating a plan to manage cash flow. “A” is for automating bill payment and saving for emergencies. “L” stands for lowering nonessential spending, and “M” is for making progress one step at a time.

The demographic group most at risk for high financial stress levels are women younger than 30 who have minor children at home and earn less than $60,000 a year; 54% of these women report high or overwhelming financial stress. Financial Finesse notes that an AP-AOL Health Poll found that people carrying high debt levels struggle with depression, anxiety and heart problems. They also experience relationship issues and substance abuse. This should be a concern to employers, Davidson notes.

Luckily, she notes, an Aon Hewitt report found that 89% of employers are interested in offering financial wellness programs. Financial Finesse’s full report can be downloaded here.
Ask the Experts July 18, 2016

(b)lines Ask the Experts – Is A Financial Audit a Good Idea for a Non-ERISA Plan?

"We are a governmental 403(b) plan sponsor.

Reported by

“We realize we’re not subject to the annual Form 5500 reporting requirement, as well as the related annual audit requirement; however, our plans are quite large, and our recordkeeper opined that it might be a ‘good idea’ for us to complete a plan audit. What say the Experts?”

Michael A. Webb, vice president, Cammack Retirement Group, answered: 

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In the Experts experience, it is a relatively rare event that governmental plans volunteer to go through the same type of audit that large Employee Retirement Income Security Act (ERISA) plan sponsors must undertake for Form 5500 purposes. The reason is that there is a fairly significant amount of work and expense involved, though the expense is typically nominal relative to the size of a larger plan.

In the uncommon instances where we have seen audits, it is typically with respect to the largest retirement plans of states, where either state law or the relevant state office (comptroller, treasury, etc.) may require that all such plans be subject to an audit.

But is an audit or compliance review a bad idea? Not necessarily! Because audited financials are NOT required for such plans, in some instances the recordkeeping for such plans may not be subject to the same level of review that is present with ERISA plans. This is especially true for 403(b) plans, which typically lack trust-level accounting (since 403(b) assets are almost never held in trust), and where assets may be invested in a variety of individual annuity contracts/custodial account agreements.

If you’ve experienced some recordkeeping errors with your plans, it might indeed be prudent to go through the plan audit or a separate compliance review process, just to see what is discovered. Although no audit or compliance review will be guaranteed to find all issues that the Internal Revenue Service (IRS) might raise, it might indeed uncover some compliance defects that can be corrected well in advance of when the IRS might come knocking at your door.

 

NOTE: This feature is to provide general information only, does not constitute legal advice, and cannot be used or substituted for legal or tax advice.  

Do YOU have a question for the Experts? If so, we would love to hear from you! Simply forward your question to rmoore@assetinternational.com with Subject: Ask the Experts, and the Experts will do their best to answer your question in a future Ask the Experts column.

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