How to Determine if Your Company Picnic Could Create a Workers Comp Claim
By Rebecca Shafer-ReduceYourWorkersComp
Source: workerscompensation.com
Many Factors to Consider if Injury is Covered
Summer picnics, softball games, corporate retreats and golf outings all sound like fun. When all the attendees are employees and an injury occurs, is it covered by workers’ compensation? “It depends” is the answer the claims adjuster or corporate counsel will give you.
In order to determine if workers’ compensation is applicable, the adjuster will have to ask a lot of questions. While the criteria may vary from state to state, the following are general guidelines to separate a workers’ compensation injury from a personal injury that is not covered by workers’ compensation.
- Is the event employer sponsored or employee sponsored?
- Is the event primarily financed by the employer?
- Does the employer benefit from the event by providing training or presentations, or by making morale speeches or passing out special achievement awards?
- Does the employer mandate attendance or is attendance voluntary?
- Does the employer encourage attendance by making a record of attendance?
- Were the employees paid for the time in attendance?
- Were employees who chose not to attend required to work their regular job if not in attendance?
- Do the employees regard the event as a fringe benefit they are entitled to?
- Does the social event occur during normal work hours?
If the answer is “yes” to most of the above questions, the injury most likely will be covered by workers’ compensation.
Activity of Employee at Time of Injury Big Factor
However, the activity of the employee at the time of the injury is also a factor in whether or not the injury is workers’ compensation related. For example – the corporate retreat is to be held Friday, Saturday and Sunday at a five star resort. The sales manager arrives on Thursday night to enjoy the amenities of the resort. While walking down the grand staircase in the hotel lobby, he trips and falls, and fractures both arms. Even though the sales manager was required to be at the resort as a part of his job, the injury occurred while the employee was there on his own time. The employer received no benefit from the sales manager arriving early to enjoy the amenities of the resort prior to the official start of the corporate retreat.
In the above example, if the same fall and injury had occurred during the course of the meeting on Saturday, while the sales manager went from one presentation to another, it would be covered by workers’ compensation.
When the benefit of the social event to the employer is hard to measure, any injury occurring is normally not workers’ compensation. This is often true with sporting events such as the company softball team, bowling team, volley ball team, etc. When the company allows the team to use the corporate name in the sports league but does not schedule the sports events, does not provide financial support and keeps no records of participation, any injury will not be covered by workers’ compensation. When all participation is totally voluntary and the sporting event is after normal business hours, any injury that occurs is not workers’ compensation. For example – the first basemen for the company sponsored softball team breaks his ankle sliding into home plate with the winning run in the bottom of the ninth inning. [WCx]
If Social Event Being Paid in Lieu of Work, Injuries Covered
When the social event is company sponsored and the company encourages participation, even if attendance is voluntary, if an injury occurs during the event, it is workers’ compensation. For example – the office Summer Picnic at the major amusement park is a huge event, and is considered a fringe benefit paid for by the employer. It is held on a week day when the employees would otherwise be working and the employees are being paid their regular earnings while attending the Summer Picnic. While doing the Limbo dance, the secretary injures her lower back. The injury would be covered by workers’ compensation due to the event being paid for by the employer, the employee being encouraged to attend and the employee being paid while participating in the event.
Social events can result in workers’ compensation claims. The facts surrounding the social event and the facts surrounding what the employee was doing at the time of the social event will be the determining factor in whether or not an injury is a workers’ compensation claim.
The cold, hard truth of 401(k) fee disclosure
By Andy Stonehouse
Source: Benefitspro.com
For the better part of the last eight months, I've been hearing about - and writing about - the great expectations attached to the DOL-mandated 401(k) fee disclosures. They created minor mainstream headlines for an industry that, despite its huge resources and massive financial holdings for so many American workers, doesn't get a lot of mainstream media coverage.
And now the day has come, the Aug. 30 deadline for the first component of participant fee disclosures, and what should arrive in my mail box but my own actual fee disclosure overview, part of my company's 401(k) plan.
Rather than being the phone book-sized pile of impenetrable paper many hinted might be a reality - prompting the still somewhat unresolved tug-of-war with the Labor Department regarding the eco-friendly notion of all-electronic disclosure statements - it's a pretty simple document.
Painfully simple, in fact. I know the new-and-improved quarterly statements, officially due Nov. 14, might carry more heft and depth, but this new annual overview left me - after eight months of anxious anticipation - a little underwhelmed.
As you've probably found in your own recent drive toward the deadline, the necessary information shouldn't come as a big shock to any participants who have even a vague interest in the management of their retirement funds.
Which, as has been previously noted, seems to make up the larger percentage of set-it-and-forget-it or "why am I even contributing to this any more if I continue to lose money" participants, nationwide.
Nonetheless, my own personal hard, cold facts - the general plan information, the potential general administrative fees and expenses and the potential individual administrative fees and expenses are pretty concisely laid out.
Nothing's hidden - not to say that it was before - and the general details are there in a form that's much easier to wade through than the 900 page disclosures attached to my annual credit card or bank fee statements.
The biggest section of the whole eight-page disclosure is the investment information, a concise chart of the various stocks, bonds and TDFs (who knew I had so many TDFs?) and their performance.
The one-year and five-year rates of return are, as we've discussed to death, not great, but the 10-year averages are more positive.
And that's that for the paperwork. So I called my representative to ask for an interpretation, and a dollar amount. He was pleasant enough, and after a brief recap of the details, he laid it on the line: My fees, for my fund, total $1.06. About the price, with tax, of a Sausage McMuffin at McDonalds.
Really? Yes, really. Not some outlandish and exorbitant price tag that was going to send me screaming to divest and put everything in gold funds, or pharmaceuticals, or Chinese cigarette companies? Yep. A buck and change.
He also had some good news about the account, overall: "You're not doing too badly. There have been some ups and downs this year but you're actually on track to make some money."
Is it time to double down and put more in the fund, I asked?
"Sure," he said. "It's up to you."
And so the moment came and went, as will for the millions who get their statements in the mail, though the vast majority will ignore them like another mailing from their car insurance company or an online gift basket catalog.
Those who do pay attention may now have a more vested interest in consulting with an expert, and that's where you come in. So I would encourage you to take advantage of that opportunity.
5 Ways Technology Can Improve Your Job Safety Anaylsis Program
By Tim Lozier
Source: ehstoday.com
Most of the time, I sit at a desk and stare at my computer. For many other organizations, however, being a desk jockey will not get products made, nor will it be productive for everyone. Most manufacturing jobs have inherent risks, whether directly related to product manufacturing or simply workplace hazards that exist throughout the facility.
Historically, companies often took a fairly broad approach to workplace safety. Safety managers would focus on the broad level of hazards and then apply them to the general work area of their employees and put controls or PPE in place as a result. Now, technology and processes have evolved to enable a much more poignant way to drive safety in the job with Job Safety Analysis (JSA) tools.
Essentially, the JSA takes a specific job, breaks it into the individual job steps and assesses the potential hazards with those steps. If the hazard is too high, then managers put controls in place to effectively reduce that hazard to acceptable levels. The idea is that once you’ve reduced the risks associated with each job step, the overall risk that the job poses is mitigated to appropriate levels.
In a small scale, this is a logical and effective measure. However, when you have thousands of employees and thousands of job types in your company, maintaining JSAs become cumbersome as a manual task. That is why technology has jumped in to ease the burden of updating JSAs, JSA reporting and creating a comprehensive JSA program. Here are five ways technology is growing the JSA trend.
1. Risk Management Quantifies Job Hazards: In many cases, no job is completely safe. Heck, I could fall out of my computer chair right here and injure myself. While JSA attempts to identify potential job hazards, it needs a method for determining the severity of the hazard and rating the safety level. Risk assessment and risk management are designed to solve this. Risk provided a systematic set of criteria that provide risk levels, usually based on severity and frequency of the hazard. Based on these levels, organizations can quantitatively determine the overall risk of a job step. Based on the risk levels, they can make better decisions on how to control these risks.
2. Job Safety Linked to Document Control: Each job step and type is associated with documentation. Most often, people are not memorizing their job steps; they need to be documented and controlled so that all processes, job descriptions, work instructions and others are the most relevant and up to date. Linking a JSA record to Document Control not only provides direct relation to the job and the procedures that associated with it, it also provides a centralized place to maintain and modify your job safety program.
3. JSA Controls Linked to Employee Training: Just because you’ve create a safe job analysis doesn’t mean it will actually work. It may work on paper (or computer screen, in this case), but unless you’ve effectively trained your employees on operating in a safe manner, it is just an analysis. To be truly effective, new job procedures, new PPE requirements and similar effects from a JSA need to be linked to training activities. This way, when a JSA is completed, your employees automatically are trained and knowledgeable on the new requirements.
4. Regular Reviews/Audits of the JSA Program: Even though you’ve set up a winning JSA program, this does not mean you are completely safe forever. Like everything in this world, change is always happening, and as your organization evolves, so too must your JSA. Technology facilitates automatic reviews of your JSA program, enabling you to regularly review the processes and ensure that the JSA you created before are still valid today.
5. Reporting on Your JSA Program: Frequently overlooked, but extremely important, is the reporting aspect of the JSA program. The key is to be able to identify how effective the JSA controls are against EHS data coming in. If you are seeing a trend that suggest there are still high levels of risk in your job safety program, then you need to be able to identify, mitigate and prevent it immediately. Reporting tools help to identify these events and provide real-time visibility into the EHS system.
Sitting here at my desk, I probably have a low-risk job (although that stapler looks pretty dangerous). But for those jobs that have real, quantifiable hazards, it is important to take measure to ensure they are safe. Technology can provide a comprehensive, integrated framework for managing job safety, taking action to document and train against JSA controls and effectively reviewing and changing your JSA programs as your organization evolves.
10 Tips to healthy eating and physical activity for you
Source: https://www.fitness.gov/10tips.htm
- Start your day with breakfast.Breakfast fills your "empty tank" to get you going after a long night without food. And it can help you do better in school. Easy to prepare breakfasts include cold cereal with fruit and low-fat milk, whole-wheat toast with peanut butter, yogurt with fruit, whole-grain waffles or even last night's pizza!
- Get Moving!It's easy to fit physical activities into your daily routine. Walk, bike or jog to see friends. Take a 10-minute activity break every hour while you read, do homework or watch TV. Climb stairs instead of taking an escalator or elevator. Try to do these things for a total of 30 minutes every day.
- Snack smart.Snacks are a great way to refuel. Choose snacks from different food groups - a glass of low-fat milk and a few graham crackers, an apple or celery sticks with peanut butter and raisins, or some dry cereal. If you eat smart at other meals, cookies, chips and candy are OK for occasional snacking.
- Work up a sweat.Vigorous work-outs - when you're breathing hard and sweating - help your heart pump better, give you more energy and help you look and feel best. Start with a warm-up that stretches your muscles. Include 20 minutes of aerobic activity, such as running, jogging, or dancing. Follow-up with activities that help make you stronger such as push-ups or lifting weights. Then cool-down with more stretching and deep breathing.
- Balance your food choices - don't eat too much of any one thing.You don't have to give up foods like hamburgers, french fries and ice cream to eat healthy. You just have to be smart about how often and how much of them you eat. Your body needs nutrients like protein, carbohydrates, fat and many different vitamins and minerals such as vitamins C and A, iron and calcium from a variety of foods. Balancing food choices from the Food Guide Pyramid and checking out the Nutrition Facts Panel on food labels will help you get all these nutrients.
- Get fit with friends or family.Being active is much more fun with friends or family. Encourage others to join you and plan one special physical activity event, like a bike ride or hiking, with a group each week.
- Eat more grains, fruits and vegetables.These foods give you carbohydrates for energy, plus vitamins, minerals and fiber. Besides, they taste good! Try breads such as whole-wheat, bagels and pita. Spaghetti and oatmeal are also in the grain group.Bananas, strawberries and melons are some great tasting fruits. Try vegetables raw, on a sandwich or salad.
- Join in physical activities at school.Whether you take a physical education class or do other physical activities at school, such as intramural sports, structures activities are a sure way to feel good, look good and stay physically fit.
- Foods aren't good or bad.A healthy eating style is like a puzzle with many parts. Each part -- or food -- is different. Some foods may have more fat, sugar or salt while others may have more vitamins or fiber. There is a place for all these foods. What makes a diet good or bad is how foods fit together. Balancing your choices is important. Fit in a higher-fat food, like pepperoni pizza, at dinner by choosing lower-fat foods at other meals. And don't forget about moderation. If two pieces of pizza fill you up, you don't need a third.
- Make healthy eating and physical activities fun!Take advantage of physical activities you and your friends enjoy doing together and eat the foods you like. Be adventurous - try new sports, games and other activities as well as new foods. You'll grow stronger, play longer, and look and feel better! Set realistic goals - don't try changing too much at once.
What you may not know about your FSA
By Jody Dietel
Source: Benefitspro.com
With fall just around the corner, benefits managers are gearing up to educate employees about flexible spending accounts for the open enrollment period. While benefits professionals may have a good handle on the tax-advantaged benefits accounts that can save participants up to 40 percent on health care, dependent care and commuting expenses, there’s still plenty about FSAs that benefit pros may not know.
Now is the perfect time for HR managers to keep details of FSAs top of mind and help employees understand the fine print so they recognize why enrolling this fall is the smart financial decision.
Eligible expenses for FSA users number in the thousands. You may be surprised at the breadth of products and services that are covered by FSAs. Participants can save big on a wide range of expenses: from dental and vision care with a health care FSA; and nannies and after-school care with a dependent care FSA. While we’re at it, don’t forget to elect your monthly commuter benefits: mass transit commuting expenses and parking for work. To explore a list of items that participants can purchase using an FSA, check outwww.savesmartspendhealthy.com.
Some eligible expenses may surprise you. While the most common covered expenses include co-pays, prescription drugs and dental and vision care, there are plenty of expenses often eligible for reimbursement that may come as a surprise. They include acupuncture treatments; doctor-ordered weight loss programs; the additional costs of gluten free food items for those with diagnosed gluten sensitivity issues; mileage to/from medical appointments and smoking cessation programs.
FSA participants need to re-enroll each year. While many other benefits like health insurance do not require employees to sign up year after year, FSAs usually don’t include automatic reenrollment. Employees should look for FSA enrollment forms each year when they get their benefits package.
Contributions can occasionally be changed mid-year or opened after open enrollment. FSA contributions are not always set in stone. A life changing event, such as a birth or death in the family, can sometimes allow participants to change the amount they decided set aside during open enrollment later in the year or start an account altogether.
The entire FSA contribution is available from day one. Unlike money from an employees’ annual salary which trickles in via paychecks every two weeks, FSA participants have access to the money they elect to contribute from day one. For families who face costly surprises early in the plan year, having the money available right off the bat can be a lifesaver.
FSAs contribute to an employers’ bottom line too. Just like participants, employers don’t have to pay payroll taxes on any of the money employees contribute directly to their FSA as opposed to receiving it in a paycheck.
FSAs are a great vehicle for employees to save hard-earned dollars. As we head into open enrollment, benefits managers helping everyone brush up on FSA details is an important step.
Employer-Provided Healthcare: One Size Does Not Fit All
By Tom Starner
Source: hreonline.com
Offering all participants in a healthcare program equal access and opportunity to receive quality care and medical purchasing efficiency should be the goal of any organization. Experts say eliminating structural and language barriers, and respecting the cultural context of each individual employee or their family members, are the keys to success.
In the world of consumer decision-making, it's very common for buying patterns to be guided by ethnic and gender preferences and differences.
There is little doubt the same is true of healthcare, but in this case, that diversity can prove costly both for employers, via rising healthcare bills, and employees, who may not receive the best possible health outcomes.
Some call it "culturally competent healthcare." To others, it is described as "targeted" health.
Whatever it's called, the emerging trend is best defined as an approach that offers all participants in the healthcare process equal access and opportunity to receive quality care and medical purchasing efficiency. How? By eliminating structural/language barriers and respecting the cultural context of each individual employee or their family members.
While a quick search will find that the concept has existed for more than a decade, employers faced with rising healthcare-benefit costs across the country are turning to this strategy. In fact, eight such employers -- Aetna, American Express, Franciscan Missionaries of Our Lady Health System, H.J. Heinz, Verizon, Pitney Bowes (in partnership with UnitedHealthcare), Cigna and Wyndham Worldwide -- recently were recognized by the U.S. Department of Health and Human Services, the White House Business Council and the National Business Group on Health for their efforts in reducing healthcare disparities in the workplace.
Stamford, Conn.-based Pitney Bowes, for example, worked with UnitedHealthcare to improve the health status of the former's employees and engage the company's Spanish-preference employees. UHC brought in a dedicated team of Hispanic professionals -- Latino Health Solutions -- to improve the health and well-being of its Hispanic/Latino members.
Mary Bradley, director of healthcare planning at Pitney Bowes, explains that as the company began to develop an ethnically diverse workforce, it needed to do more to help specific employee populations get the most out of their healthcare benefits. In one case, the company acquired some new facilities where employees had a basic understanding of English, which was not enough to use their benefits appropriately.
"That was a defining moment for us, knowing we had to do something different," she says. "We started with a basic focus group that spoke both English and Spanish, and went from there."
For one, it was difficult for those employees to find Spanish-speaking providers. In many cases, their children were translating the benefits information. Also, an unexpected finding was "informal" local leadership felt pressured to provide translation for co-workers.
"People were always clustering around them, constantly asking them questions, and they were distracted from doing their own benefits decision-making," she says.
Of course, using informal trainers was not a good solution. Enter the partnership with UHC and its Latino Health Solutions group.
"LHS had initially focused on smaller markets," says Bradley, adding that Pitney Bowes, which is a $5.3 billion company with 29,000 employees worldwide, recently launched an Asian-American effort as well. "We were the first employer to integrate their services into a national self-insured program."
As far as bottom line value goes, Pitney Bowes is certain that the strategy is a win-win for both employees and the company.
"We know this is important work, because employee health is a huge driver of quality of life [for employees] and productivity [for Pitney Bowes]," says Johnna Torsone, the company's executive vice president and chief human resources officer. "It is equally important for leaders to share best practices so that more companies and people can benefit from these efforts and learnings."
Aetna, another company honored for its efforts, offers, among other tools and features, a dashboard that helps identify health conditions that are more common among ethnic and racial minority populations.This information is used to create targeted programs to improve health outcomes.
In the past 11 years, Aetna initiatives include Breast Health Ethnic Disparities Initiative, Beginning Right Maternity Program, African-American Hypertension Study, and ER Utilization in Minority Asthmatic Populations. Also, a key component of the effort has been the company-supported and employee-managed employee resource groups. ERGs have helped reduce barriers to collecting racial and ethnic data on a voluntary basis to help create more culturally focused disease management and wellness programs.
"We must continue to develop targeted programs that address differences in healthcare among people of different races and ethnic backgrounds," says Aetna's Dr. Wayne Rawlins, national medical director.
Another insurer, Philadelphia-based Cigna, launched its Health Disparities Council in 2008. It comprises more than 200 employee volunteers from across the company's departments who facilitate the exchange of ideas, share knowledge, and identify internal and external opportunities to address healthcare disparities in culturally sensitive and medically appropriate ways.
Also, a key part of Cigna's work has been improving the cultural competency and linguistic sensitivity of its staff. More than 20,000 employees have completed cultural competency training and all bilingual employees are tested for proficiency. The company has also adapted into Spanish and traditional Chinese its "Words We Use" guide for simpler communications.
"It gets back to the concept of 'know me as an individual,' which is fundamental to our strategy," says David Cordani, Cigna's president and chief executive officer. "If we're going to be successful at helping people improve their health, we have to reach them at an appropriate time with meaningful messages that relate to their unique status."
While the eight companies cited are leading the way, there is still much work to be done within the HR and employers. For example, a study by the Joint Center for Political and Economic Studies calculated the direct and indirect costs of racial and ethnic disparities in healthcare in the United States for the period 2003 through 2006 was $229.6 billion.
Also, a 2008 survey by the Harvard School of Public Health of 609 large public and private employers and 252 health plans showed that nearly all health plans (90 percent) and most employers (58 percent, with the percentage increasing with size of employer) cite healthcare disparities. However, only three percent of employer respondents analyzed differences in health plan performance by race and ethnicity or chose plans that addressed racial and ethnic disparities.
Jim Winkler, the chief innovation officer for health and benefits consulting at Aon Consulting, in Norwalk, Conn., says he sees this growing trend as a part of a broader strategy that requires employers to finally stop thinking that everyone is the same.
"It is about being culturally aware, age and gender aware, and understanding the different mindsets these groups have," he says. "This is finally getting more traction. Employers for a long time were all using fancy words to say 'we print [our] manuals in English and Spanish'."
Winkler adds all of the companies honored go well beyond just communicating differently or changing a phone prompt to both English and Spanish.
"It's clear that in different cultural settings people think and act differently in how they view health and using the healthcare system," he says. "This is much more frequently discussed as a topic."
The fact that this is only the second annual Healthcare Disparities award alone speaks volumes about how new it all is in terms of real action, Winkler notes.
"Today, there is movement away from recognizing just language differences to recognizing cultural differences," he says. "The makeup in the U.S. is changing and employers are focusing on the workforce globally. We know from years of banging our heads against the wall that traditional disease management programs don't work. Today we all think and act differently."
10 Common Myths That Could Be Hurting Your Retirement Planning
By Erik Carter
Source: Forbes
In our latest research report, retirement was the number one financial priority of employees that took our online financial wellness assessment. It’s also a growing area of interest as the percentage of questions we’ve received about retirement planning went from 14% in 2009 to 32% the same time this year. However, I find that when I’m leading a retirement workshop or answering questions on our financial helpline, there are still quite a few recurring myths out there that could be hurting people’s ability to plan properly for their retirement. Here are 10 of the ones I hear most often:
1. It’s too early to start saving for retirement. We see this most commonly with young people. For example, those under 30 were the only age group not to list retirement as their top priority and had the lowest participation rates in their employer’s retirement plan of any age group. This is particularly unfortunate for several reasons. First, with the disappearance of traditional pension plans and the impending insolvency of government programs like Social Security and Medicare, young people will likely need to save even more than previous generations. Second, they have the most to gain from being able to invest more aggressively and benefit longer from the magic of compounding. Finally, the financial habits that young people develop early in their careers can stick with them throughout the rest of their lives.
If you’re just starting your career, try to contribute at least enough to get your employer’s match so you don’t leave that free money on the table, even if it means having to share living expenses with a roommate for a bit longer. You can then begin to slowly increase your contributions over time as their income grows. Your retirement plan may even have a contribution rate escalator that will do that for you automatically.
2. I’ll need about 80% of my current income in retirement. For many people this may be true, but retirement needs can vary dramatically based on your particular circumstances. You may need less than this if you’re saving a lot for retirement, will have your mortgage paid off, or are planning to downsize or move to a lower cost area. On the other hand, you may need more than 80% if you want to spend more time traveling or engaging in other expensive activities.
One expense that people often underestimate or neglect to factor in at all is the cost of health care. This is especially true if you’re planning to retire before you are eligible for Medicare at age 65 and would not be covered under your spouse’s plan since you would then probably need to purchase insurance on your own, which can be very expensive. Even once you reach age 65, a recent study estimated that a typical 65-yr old couple without any other health insurance would need about $240k to cover medical costs over their lifetime, not factoring in long term care or any reductions the government may make to keep Medicare solvent.
3. I won’t see a dime from Social Security. This myth comes from the fact that the Social Security trust fund has been projected to run out in 2033. The good news is that doesn’t mean there won’t be any money at all in the program. After all, millions of people will still be paying taxes into the system. However, it’s projected that there will only be enough money to pay about 75% of the promised benefits. That means you may want to take your estimated benefit and reduce it by 25%. While it seems safer to assume you’ll get nothing at all, the amount you’d have to save in that unlikely scenario can be discouraging.
4. If I contribute to a retirement plan, my money will be all tied up. This myth is often tied to the first one since young people are typically also saving for emergencies, a home purchase, and possibly going back to school. One of the best solutions for someone in this situation is a Roth IRA since the sum of the contributions can be withdrawn at any time and for any reason without tax or penalty. Whatever you don’t need to withdraw will then grow and become tax-free after age 59 1/2 (as long as the account has been open for at least 5 years).
If you already have a sizeable balance in your employer’s retirement plan, you may still be able to access this money tax and penalty free by taking a loan. Unlike credit cards and home equity loans, there is no credit check and the interest goes back into your own account. As a last resort, you may also be able to request a hardship withdrawal. Just be aware that these are limited to certain circumstances, are subject to taxes and early withdrawal penalties, and cannot be paid back. While it’s best not to touch your retirement money at all, knowing these options are available can help make you feel more comfortable about contributing to these accounts.
5. I should automatically roll my retirement plans into an IRA when I leave a company. Many financial advisors like to give this impression since most of them make money managing IRAs or selling the investments in them, but there are several reasons why it isn’t always a good idea. First, if you retire during or after the year you turn 55, you would be able to make penalty-free withdrawals from that employer’s retirement plan immediately, while you’d have to wait until age 59 1/2 with an IRA. Second, if you have company stock in your retirement plan, you may get favorable tax treatment transferring the stock to a brokerage account rather than rolling it into an IRA. Finally, you may have access to lower cost investments and advice services than with an IRA.
6. I can’t contribute to an IRA because I have a retirement plan at work. This myth comes from the fact that if you’re covered by a retirement plan at work, there are income limits in being able to deduct traditional IRA contributions. However, even if you don’t qualify for the deduction, you can still make nondeductible (but still tax-deferred) and possibly Roth IRA contributions.
7. My income is too high to put money in a Roth IRA. You may earn too much to contribute to a Roth IRA but there is a way to get money into a Roth IRA through the backdoor. Since there’s no income limit on Roth IRA conversions you can contribute to a nondeductible IRA and then convert it into a Roth. The only catch is that if you have other pre-tax IRAs, you’ll have to pay a tax on the converted IRA on a pro-rata basis. However, you can avoid this by rolling the pre-tax IRAs into your employer’s retirement account.
8. My tax rate will be the same in retirement so I don’t get any benefit from tax-deferral. While it’s true that many people will be in the same tax bracket in retirement, that doesn’t mean you won’t benefit from tax-deferral. First, you may be in the same bracket but pay a lower effective rate in retirement. For example, let’s say that you’re in the 25% bracket both now and after you retire. When you contribute to a pre-tax 401(k), you’re contributing money that would otherwise be taxed at 25%. But when you withdraw that money in retirement, some of that money is likely to get taxed at the lower brackets, providing for a lower average rate. Second, even if you pay the same rate when you retire, you’ll still benefit from all the extra earnings on the money that would have gone to taxes each year.
9. I can be well-diversified by just spreading money around all the options in my retirement plan. Depending on how that money is spread out, you may not be as diversified as you think. For example, let’s say your plan has 5 options: a company stock fund, 3 other stock funds, and a bond fund. If you spread your money equally, you’d have 20% in bonds and 80% in stocks, with 20% in company stock. That’s a pretty aggressive mix and it’s generally a good idea not to have more than 10-15% in any one stock, especially if it’s your employer’s since your job is already tied to your company’s fortunes.
You can actually be well-diversified with as little as one fund by picking a one-stop shop asset-allocation fund like a target date retirement fund. These funds divide your money into lots of different investments based on how long you have until retirement. You can also build a customized portfolio based on your particular risk tolerance and time frame using a worksheet like this.
10. I should invest my retirement account in the top-performing funds. Picking the top performing funds may seem intuitive but it turns out that not only is past performance a poor indicator of future performance, it may actually be an indicator of poor future performance. Standard and Poor’s does an ongoing study in which they look at the top 25% of mutual funds in various categories and see how they did 5 years later. Their latest report shows that these top performers are actually less likely than average to continue being a top performer.
Instead of looking at past performance, look at costs when comparing similar type funds. Numerous studies have shown a pretty good correlation between low costs and superior investment results. In fact, Morningstar even had to admit that low fees and expenses are a better indicator of performance than their own star ratings.
Data Breach? React to the Attack
By Matthew A. Cebrian and Brittany W. Yang
Source: Law Technology News- www.Law.com
In today's digital economy it is relatively impossible for an enterprise to conduct business without collecting, holding, or storing personally identifiable information -- names and addresses, Social Security numbers, credit card numbers, or other account numbers -- of customers, employees, business partners, students, or patients. Moreover, given recent cyberattacks against Sony, LinkedIn Corp., eHarmony Inc., Last.fm, and Wyndham Hotels, it seems that such attacks are on the rise. While there is relatively little an attorney can do to thwart the malicious keystrokes of a hacker, she can take steps to ensure her clients are prepared to react to an attack. There are a number of state and federal regulations that mandate that certain steps be taken both before and after a data breach, and failing to comply with these requirements could result in substantial liability, as well as a public relations nightmare. A recent lawsuit filed in the U.S. District Court for the Northern District of California raises questions as to whether mere compliance with California's privacy laws will act to insulate businesses from liability in the event of a breach.
Effective on July 1, 2004, the California Online Privacy Protection Act of 2003 (California Business and Profession Code §22575 et seq.) requires each owner of a commercial website or online service to conspicuously post its privacy policy on its website if it collects personally identifiable information through the Internet about individual consumers residing in California who use or visit its website or online service. As to online services, the policy must be made available by reasonably accessible means for consumers of the online service.
This act is applicable to any individual or entity (corporation) that owns a commercial Web page or an online service that collects and records confidential personal information from an individual living in California, visiting such Web pages. This act, however, is not applicable to ISPs or similar entities who record data upon request from a third party.
Under OPPA, confidential personal information, collected online, includes first and last names, a street address, an email address, a telephone number, a Social Security number, or various other data which allows the tracking of a user. Personally identifiable information can include date of birth, height, weight, etc., when this information is recorded and stored online by the operator in combination with one of the above identifiers. An individual user is one seeking to or acquiring goods or services, money or credit for himself, his family, or his household.
OPPA is enforced through California's unfair competition law (California Business and Profession Code §17200 et seq.), which provides for civil fines and injunctive relief and may, in certain instances, allow for the recovery of attorney fees. The upside for those who may face liability stemming from a violation of OPPA, or security breaches generally, is that to a large extent, plaintiffs have not succeeded, and courts usually have dismissed the cases because the suing individuals failed to state legally cognizable claims for damages. See e.g.,Pisciotta v. Old Nat'l Bancorp, 499 F.3d 629 (7th Cir. 2007). Thus, while a plaintiff may be able to establish a violation of the statute, his ability to recover is somewhat limited by the lack of a cognizable loss.
On Feb. 22, the attorney general of California and a collection of companies in the mobile app business (namely Amazon Inc., Google Inc., Apple Inc., Hewlett-Packard Co., Microsoft Corp., and Research in Motion Ltd.) adopted a Joint Statement of Principles, in which the AG announced its opinion that OPPA requires mobile apps that collect personal data from California consumers to conspicuously post a privacy policy. With the Joint Statement, the signatories announced their efforts to develop principles that would foster innovation in privacy protection, promote transparency in privacy practices, and facilitate compliance with privacy laws in the mobile arena. However, the principles identified are not intended to be legally binding on the companies. They center on integrating the OPPA requirements on mobile apps that are not traditionally thought of as websites or "online services." OPPA's application to mobile apps could be a harbinger of liability for developers, but strategic counsel might take the position that voluntary compliance might help to minimize social outrage in the event of a security breach.
California was the first state to adopt a law requiring consumers to be notified in the event of a data security breach. The Data Protection Act, or SB 1386, was enacted in 2002, and became effective July 1, 2003. Not surprisingly, since 2003, at least 46 states have since adopted similar laws.
SB 1386 requires businesses to disclose breaches to affected persons "in the most expedient time possible and without unreasonable delay, consistent with the legitimate needs of law enforcement ... or any measures necessary to determine the scope of the breach and restore the reasonable integrity of the data system."
Section 1798.81.5(a) provides: "A business that owns or licenses personal information about a California resident shall implement and maintain reasonable security procedures and practices appropriate to the nature of the information, to protect the personal information from unauthorized access, destruction, use, modification or disclosure."
Section 1798.82(a) of the act states a "person or business that conducts business in California, and that owns or licenses computerized data that includes personal information, shall disclose any breach of the security of the system following discovery or notification of the breach in the security of the data to any resident of California whose unencrypted personal information was, or is reasonably believed to have been, acquired by an unauthorized person."
For purposes of this statute, "personal information" is defined as "an individual's first name or first initial and last name in combination with any one or more of the following data elements, when either the name or the data elements are not encrypted: (1) Social security number, (2) driver's license number or California identification card number, (3) account number, credit or debit card number, in combination with any required security code, access code or password that would permit access to an individual's financial account, (4) medical information, or (5) health insurance information." Notably, §1798.84(b), provides for the right to bring a civil action for violating §1798.82.
The act does not define what constitutes "reasonable security measures," instead requiring that such measures be commensurate with the type of data being maintained by the business. While this might suggest the law requires businesses keep abreast of current encryption practices, the law itself only applies to unencrypted information. Assuming counsel advise their clients to include encryption as part of their risk management strategy, SB 1386 is a lot of bark without any bite. That said, a recent suit filed against LinkedIn suggests that even encryption software will not prevent liability in the event of a breach.
On June 15, a class action was filed against LinkedIn seeking in excess of $5 million following a security breach. According to the suit, on June 6, a list of approximately 6.5 million encrypted passwords retrieved from LinkedIn's database were publicly posted online by hackers. While the passwords were indeed encrypted, the lawsuit alleges the encryption technology used was outdated and not in accordance with conventional data protection methods. As part of LinkedIn's OPPA mandated privacy policy, LinkedIn represented to its users that it would implement "industry standard protocols and technology" to protect its users information. According to the lawsuit, LinkedIn's security measures ran afoul of this representation and thus exposed them to liability. The complaint includes causes of action for violations of California Business and Profession Code §17200, breach of contract, negligence, and others.
Given the amount of information that is collected by virtually any commercially viable company in today's economy, and the rise of the frequency of those attacks being mounted by hackers, it is imperative that businesses and their counsel take steps to stay abreast of the applicable privacy laws and formulate comprehensive risk managements policies to combat this growing threat.
Baby boomers, Gen Xers view retirement through rose-colored glasses
By Margarida Correia
Source: eba.benefitnews.com
The majority of baby boomers and Gen Xers appear to be looking at their retirement years through rose-colored glasses. More than three in four feel confident they will have enough money to live comfortably in retirement, even though nearly 40% of baby boomers and about two-thirds of Gen Xers have less than $100,000 in retirement savings. Moreover, a worrisome percentage —21.7% of baby boomers and 27.8% of Gen Xers — has no retirement savings at all. The grim statistics are the highlights of a report released by the Insured Retirement Institute.
In addition to insufficient savings, significant portions of baby boomers and Gen Xers lack investment knowledge and have not taken important retirement planning steps such as calculating a retirement savings goal, the report found. Slightly more than half (51.4%) of baby boomers and less than half (40.7%) of Generation Xers have tried to calculate how much savings they will need for a comfortable retirement.
It wasn't all bad news. Baby boomers and Gen Xers who work with financial advisers, calculate their retirement savings needs and own annuities report having greater levels of retirement confidence, the study found. For example, among baby boomers who consulted a financial adviser, 42.8% reported feeling extremely or very confident about their retirement readiness compared with 32.3% who did not consult an adviser. Gen Xers also registered similar gains in retirement confidence from working with financial advisers.
The report was drawn from two surveys conducted by Woelfel Research, Inc., on behalf of IRI. One survey polled 503 Americans, ages 50 to 66, in February and March 2012. The other polled 802 Americans, ages 30 to 49, in November 10 - 22, 2011.
Summer Bump
Participants in 401(k) plans tend to take out more loans during the summer months, according to an analysis by Charles Schwab. Generally, requests for loans increase about 16 percent in those months, the report said. While the economy might seem like a likely culprit, Catherine Golladay, a vice president of participant services for Schwab, said a big reason that participants dig into their 401(k)s is the need for college funding for their children.