Fringe Benefits Are Key For Small Businesses - Brief Article

USA Today (Society for the Advancement of Education), Jan, 2001

Every small-business owner is aware that attracting and retaining employees is difficult in today's tight labor market. Providing competitive fringe benefits, ranging from retirement plans to long-term care insurance, is one answer, several members of the Financial Planning Association, Denver, Colo., say.

"Over the last few years, dramatic legislative changes have given owners of closely held businesses planning opportunities that never would have been thought possible," indicates retirement expert Bruce J. Temkin. One example he cites is the elimination of Section 415(e) of the Internal Revenue Code. Its elimination means that employers no longer are limited in the amount they can contribute on behalf of an employee who participates in both the employer's defined benefit and defined contribution plans.

Other changes have made it easier for owners to amend a traditional profit-sharing plan in order to make additional contributions to their own retirement or that of key employees without having to increase contributions to all employees. Age-weighted plans that enable older employees to sock away more than younger employees also are increasingly popular. These changes make retirement plans more attractive to owners, and encourages them to introduce or keep retirement plans that benefit all employees.

Adding employee benefits is increasingly common in today's tight labor market. Financial planner Dave C. Grosjean cites an example in which a client is adding a disability insurance plan to existing health and dental plans. "He is concerned about being able to attract laborers for an upcoming road construction project and he wanted to add fringe benefits as opposed to giving raises. He can say he has something his competitors don't have."

A hot new area of employee fringe benefits involves long-term care. Gregory P. Seal, a financial planner and specialist in long-term care, points out that business owners are increasingly finding their employees requesting more time off or struggling emotionally because of care-giving crises. This, in turn, affects worker productivity. He suggests that the introduction of group long-term care insurance is one answer, but so is educating employees about long-term care issues, which lowers their anxiety threshold. Seal maintains that "Employers are going to have to offer these benefits with unemployment as low as it is."