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Section 125 Plans
Steps to Implement a Section 125 Plan
The purpose of this Package is to provide services in designing and implementing a Section 125 Plan to meet our client's cost reduction objectives.
Clarify Key Section 125 designs:
- What is a Premium Only Plan (POP)?
- What is a Flexible Spending Account?
- What is a full Cafeteria Plan?
Design Phase
Initially, we review your objectives to be achieved under the Section 125 Plan. Typical objectives include helping employees pay their costs for medical premiums with pre-tax dollars, saving FICA taxes, and potentially shifting the cost of medical benefits to other employers through the use of an "opt out" provision. During this process we will also assist in identifying the benefits to be included in the Section 125 Plan, including premium payments, medical flexible spending accounts and dependent care benefits. We may also discuss the interaction of your Section 125 Plan with any existing qualified retirement plans to coordinate the definitions of compensation, and to explain other planning opportunities.
Education
After the design of the Section 125 Plan is finalized, we will work with you in reviewing many of the general rules applicable to the Plan. For example, we will explain the general administration of the Section 125 Plan, the "use or lose it rule", the ability of employees to change their elections for "changes in family status" and the interaction of a Section 125 Plan with the Federal Family and Medical act and other laws and statutes, including COBRA.
Documentation of the Plan
- Plan Document. We will provide a Draft Section 125 Plan document incorporating all of the design features.
- Summary Plan Description. In addition to the Section I25 Plan document, we will provide a Summary Plan Description ("SPD") to help explain the terms of the program to employees.
- Tax Matrix. To further help understand the tax rules regarding the Section 125 Plan, we will provide a Tax Matrix reviewing the federal income tax, FICA tax, and state tax treatment of all employer and employee contributions in all states in which employees exist.
- Election Forms. Lastly, we will provide standard Election Forms.
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New Jersey Retirement Plans
The services described below will be provided for initial plan installation or a conversion from a previous plan.
- Establishment of a Plan:
- Review plan design and proposed insurance company or financial institution Recordkeeping and Investment Services or Products.
- Prepare or Update Plan Documents If Using Prototype (for review by counsel):
- Plan Document (consider appropriateness of Prototype, Volume Submitter or individually designed plan documents).
- Prepare Signature-Ready Adoption Agreement Based on Information Provided by Employer.
- Provide Summary Plan Description based on Prototype Plan, as adopted by Employer.
- Design and Select Funding Vehicle Provide Investment Information and All Administrative Forms (Investment Provide Direction forms, Fund Transfer forms, etc.).
- Assist in Obtaining IRS Determination Letter (for Non-Standardized Prototype Plans).
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Cobra Compliance Package
Though many employers are baffled by the complex requirements of COBRA, they can be understood and managed. Employers' first obligation under COBRA is to properly notify all existing covered employees and dependents of their COBRA rights. We have worked with legal counsel to develop a "COBRA Compliance Package" for clients of The Spiro Group. The Package includes the following materials:
- Purpose of COBRA.
- Employers subject to COBRA.
- Qualified beneficiaries entitled to COBRA coverage.
- Qualifying events that trigger entitlement to COBRA rights.
- Cobra coverage entitlement.
- Election time line.
- Period of coverage.
- Termination of coverage.
- Notification checklist.
- Initial notification letter.
- Qualifying event letter.
- Premium.
- Sanctions.
- Excise Tax.
- Noncompliance period.
- Grace period.
- Audit rule.
- Reasonable diligence.
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Family Leave Act
Family Leave Act Compliance Package
To help employers comply with the Federal Family & Medical Leave Act ("FMLA") we have worked with legal counsel to develop a "Federal Family Leave Act Compliance Package" for clients of The Spiro Group. The Package includes the following materials:
- A Family Leave Compliance Checklist.
- The Department of Labor Notice which should be posted in a conspicuous place where it may be read by all employees, and an alternative Notice which combines both the
- New Jersey and Federal rules.
- A "Notice of Expectations and Obligations" which may be provided to employees requesting family leaves (after it is revised to reflect your Company's decisions and benefits).
- A Family Leave Policy to comply with FMLA, which has been annotated to assist in making certain administrative decisions (such as if employees will be required to "spend down" paid leave before taking unpaid leaves). The Policy also specifically addresses several New Jersey leave issues.
- A Unanimous Consent of the Board of Directors to Adopt the Family Leave Policy.
- Notice of Request for Family Leave Form.
- Worksheets to Evaluate Leave Requests.
- Certifications Used to Establish Eligibility for Family Leave.
- Certification of Employee's Fitness to Return to Work.
- Notice of Approval of Request for Family Leave.
- Notice of Denial of Request for Family Leave.
- Notice to Key Employee of Denial of Restoration.
- A Comparison of the Federal and New Jersey Family Leave Laws.
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Due Diligence Summary
To begin preparation of a Due Diligence Summary we generally request copies of the following materials be forwarded to our attention:
- Any employee handbooks given to new employees, or any internal employment policies and procedures.
- Any materials provided to new employees to explain an employer's benefit programs, and any individual elections, including Election Forms.
- All plan documents for qualified retirement, medical, Section 125, short‑term and long‑term disability, life insurance, severance and other welfare plans.
- All Summary Plan Descriptions ("SPDs") for the above plans.
- Any documents for nonqualified retirement programs and other supplemental benefits.
- All incentive and nonqualified stock option plans, and documents for any Section 423 employee
- stock purchase plans.
- Copies of the most recent Form 5500s filed for all pension and welfare programs
- Copies of all COBRA and HIPAA Forms, certificates and compliance procedures.
Upon receipt of the above information we prepare a Draft Due Diligence Summary for purposes of discussion. The Draft Summary includes the following:
- A listing of all pension and welfare employee benefit plans, payroll practices, fringe benefits, etc.
- The identification of all plans subject to the tax rules under the Internal Revenue Code and/or the provisions of ERISA.
- For each plan and policy we reflect if any Form 5500, Summary Annual Reports ("SARs"), SPD or other reporting and disclosure requirements must be satisfied.
- A review of the current status of all plan documents is conducted
- Comments are provided for most employment policies and procedures.
- Recommendations on plan design, liability, and other cost savings and planning opportunities are highlighted for consideration by the employer.
After preparation of an initial Draft Summary we will conduct a meeting and/or a conference call to review the Draft Summary. This process is typically a learning experience for all parties, and helps to ensure that no plans are overlooked and that all issues are adequately addressed.
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International Benefits
Insurance is designed to protect against unforeseen events, and nothing can be more uncertain in life than spending time outside of your home country. At home, you have family, friends, companies, and coworkers to protect and assist you in times of turmoil. Who will be there for you overseas?
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Human Resource Services
The Spiro Group's employee benefits & Human Resource consulting services provides value added solutions. We have the answers to your PA group insurance, NJ employee benefit and human resource questions. Leveraging The Spiro Group's employee benefits experience and resources will increase efficiency and maximize results.
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