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Maximize Total Benefits with Profit Sharing Plan

Maximize Total Benefits with Profit Sharing Plan  

Maximize Total Benefit options and choices for the benefit of plan participants and plan sponsor alike. Many firms encourage participants to maximize total benefits through a strong 401k plan participation is one-way participants can get the most out of their retirement plan; however, offering a pure profit sharing feature is also a valuable and timely benefit. At the conclusion of a Plan Sponsor University (TPSU) Fiduciary Education Program held at the Westminster College in Salt Lake City, Utah, TPSU Founder and CEO, Fred Barstein spoke with TPSU program attendee, Jake.  At Jake’s organization his company wants patricians to know and comprehend the entire benefits package. For that reason, Jake’s firm has taken an interesting approach to the company Profit Sharing Plan. View the video to learn how Jakes fit decide what hey should be doing to maximize benefit.

Full Transcript Here

Fred Barsten:
This is Fred Barstein with 401k TV in beautiful Salt Lake City at Westminster College where we just completed a TPSU program. We’ll be doing one every six months here. I am glad to be welcoming Jake.

Jake:
Hi. It’s good to be here.

Fred Barstein:
Okay if we ask you a few questions?

Jake:
Yeah, please.

Fred Barstein:
Very good. One of the things you talked about was … I think a trend we’re seeing in the market is what somebody called the cafeteria style of benefits including retirement. Can you explain what that means?

Jake:
Yeah, absolutely. What that means for us is we’ve had a matching component of our 401k and a profit sharing component for a really long time. We always felt like the profit sharing component sat in the background and wasn’t fully appreciated by our team members. What we wanted to do is to bring that to the forefront where maybe for one team member, they would prefer, that do have a higher contribution towards their retirement. Maybe somebody else is more concerned with 401k loans or excuse me, with education loans.

Jake:
With that, what we were able to do is to give them a choice. How and where they want to spend their money. Once a year they actually make an election about how they’re going to receive their profit sharing dollars.

Fred Barstein:
Can it also go into an HSA?

Jake:
It can. Yep. The third thing, we’ve always been a big proponent of HSAs. We’ve had one for about 10 years. For the longest time it took a while to educate people to just say, use this to pay for healthcare. Now we’re teaching them how to use it as a retirement vehicle. For those that are maxing out their 401k, this gives them one other place to maybe put some additional retirement dollars and help them save for healthcare as well.

Fred Barstein:
Triple tax benefit.

Jake:
Absolutely.

Fred Barstein:
How’s that working? Have you seen a difference with your employees?

Jake:
We are in the early stages of rolling it out actually. We just announced it as part of this opening open enrollment. The excitement was fully focused there. People got really excited when they learned that … Hey, you know what, there’s this essential 3% that I now have additional flexibility over.

Fred Barstein:
That’s great. I think it’s very innovative. Congratulations on that.

Jake:
Absolutely. We’re excited about it.

Fred Barstein:
A couple of things you picked up here at the program, TPSU, that you may want to implement?

Jake:
That I’m not alone in our our struggles to educate people was number one. Then I think to know that we’re not alone in coming up with those solutions. I think we’re going to push really hard to educate people about these resources that they have and what we can do to increase those contributions. I would like to see what we can do to help people or help our leadership team to feel comfortable to maybe do a little bit higher auto increase. We’ve been stuck at about 3% for a really long time. To see if there might be some opportunities there.

Fred Barstein:
Very good. Thank you for your time today.

Jake:
It’s good to be here.

Fred Barstein:
Thank you for watching 401k TV. Please stay tuned.

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