Reader Responses April 6, 2003

SURVEY SAYS: The 4th Of July

June 28, 2001 - A week from yesterday, most workers in the US will be celebrating Independence Day with a day off work. But, as expected, the mid-week occurrence of one of the few remaining holidays that doesn't get shuffled around is making for some interesting holiday arrangements.
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Nearly 82% of our survey respondents are only getting the 4th off, although as one might expect a large number of respondents (and their co-workers) will be taking a few extra days off before and/or after the holiday. A large number would normally have gotten a four-day weekend had the 4th fallen on any day of the week OTHER than Wednesday (better luck next year, as they say). Only 11% were willing to commit to an early start “off” on the third, while 1% were taking both the third AND the fourth off. Just 0.57% were taking the full week off.

Roughly 6% of respondents to our survey were doing “something” else, with a wide variety of alternatives. The most common alternative was a creative use of floating holidays ? and several are in 24/7 businesses that can’t EVER take a day off (see below).

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In the “Why Bother” Category:

“We will close on the 4th only this year. However, the week is dead. Employees are generally just watching the grass grow. Next year when the 4th is on Thursday, we will close the offices and manufacturing operations and require all to take a vacation day or use one of the personal days allotted to them. This may cause a little grumbling but from a productivity point of view it is well worth it.”

“We’ll be closed on the 4th (but I won’t be planning any big meetings for the afternoon of the 3rd).”

“We are officially closed on the 4th and I assume leave early on the 3rd since leaving early on the business day before a holiday has become the American Way. That is as expected as an annual raise. The frustrating thing is that the powers that be never (a) decide on exactly when or (b) notify the group of “(a)” until the last minute. So it is hard to plan for the 3rd. We could just officially have a ½ day on the 3rd, but then we’d want more anyway….never satisfied….the real American Way.”

“Just the 4th (d), but we get to dress casual on Tuesday (Yippee).”

“We may as well shut down the rest of the week after the 4th. Clients and employees alike are out of the office physically, or mentally.”

From the Round the Clock “Club”

“Our company does not close. We consider it a holiday and pay double time to those that work, but we are a farm and chickens have to be feed.”

“We are a hospital. We remain open 24 hours per day / 7 days per week.”

“Our customers will be working and purchasing materials. Since they pay our bills we will be working to support them.”

Alternative Approaches

“Several years ago, we traded the Veterans Day holiday for an extra day attached to the 4th holiday. That was great until this year when the 4th is on Wednesday. Our office is actually going to be open the entire week. Each employee got to take two days off during the week –any two as long as there would be a few people here each day. I took Monday and Friday to have two long weekends –Wednesday is kind of a bonus –even though I’m working, it will be an easy day since everyone else is closed — no phone calls.”

“Our office will close the 4th, 5th, & 6th- we get a 5-day weekend! The 4th & 5th are actual paid holidays and the 6th is a day off but the hours must be made up the following Mon-Thur by working four 10-hour days.”

“For the Fourth of July our company is closing the 4th, 5th and 6th. These were floating holiday dates chosen by employees at he beginning of the year….”

Compliance April 5, 2003

At Last – Congress Passes Pension Reform

May 28, 2001 (PLANSPONSOR.com) - Despite last minute jostling and being tied to a sometimes controversial tax package, pension reform finally got through Congress Saturday, on its way to President Bush's desk. The President is expected to sign the bill after lawmakers return from the Memorial Day recess in early June.
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For plan sponsors, the surviving bill, the Economic Growth &Tax Relief Reconciliation Act of 2001, is refreshingly similar to the latest version of the Portman-Cardin bill (HR 10), both in terms of content and timing.

Among other things, the bill:

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  • Boosts contribution limits to 401(k)s, 403(b)s and 457 plans to $15,000/year over the next several years ($11,000 next year)
  • Increases the 415(b) (maximum annual benefits) dollar limit (to $160,000 next year)
  • Increases 415(c) dollar limit to $40,000 next year (from $35,000 at present)
  • Permits plan loans for partners and subchapter s shareholders
  • Allows elective deferrals to be excluded from the 404 deduction limits
  • Exempts new small employer plans (those with less than 100 employees) from having to pay a user fee for a determination letter
  • Offers a tax credit for the start-up costs of a new small business retirement plan (less than 100 participants)
  • Increases the profit-sharing deduction limit to 25% (from 15% at present)
  • Increases 415(c) compensation limit to 100% of compensation from 25% at present
  • Enhances portability provisions, allowing rollovers between defined contribution plans without restriction, as well as between IRAs and employer plans
  • Top-heavy testing simplified, including repeals of the 5-year lookback
  • All matching contributions must vest within three years
  • Multiple use test repealed
  • Allows qualified plan catch-up contributions for those age 50 and above ($1,000 next year for qualified plans)

The catch-up contributions are exempt from nondiscrimination testing, if all employees over age 50 participating are eligible to make a catch-up.

As for cash balance plans, the final bill adopted the language from the House version that essentially directs Treasury to expand the ERISA 204(h) notice for plan amendments significantly reducing benefit accruals.

»  Clickhere for a more complete listing of the pension provisions

Four “Score”

The 417-page $1.35 trillion tax bill compromise was reached by Rep. Thomas (R-Ca.), Senator Grassley (R-IA) and Sens. Baucus (D-MT) and Breaux (D-La) after an all-day Friday meeting in a second-floor Capitol room.

The bill passed the Senate by a 58-33 vote just hours after the House approved it by a 240-154 margin, with 28 Democrats joining all voting Republicans.  Just two Republican Senators voted against the measure, Sens. Chaffee (RI) and McCain (AZ), while a dozen Democratic Senators crossed the aisle in support of the measure.

However, the final compromise bill assumes that most tax cuts expire on December 31, 2010 so that all the relief would fit under the $1.35 trillion ceiling. The provisions also would end in 2010 unless renewed by a future Congress.

Other Benefits

Aside from pension reform, the bill also includes other benefits for employers.  Beginning next year businesses will be eligible for a tax credit of 25% of actual child care expenses they provide and 10% of the cost of child care resource and referral services they offer, with a cap of $150,000 per tax year, according to CCH.

The bill also includes a permanent extension of the exclusion for employer-provided educational assistance (up to $5,200/year, and expands it to encompass gradu

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