Why it’s important to review workplace benefits in October

October 5, 2016

by Deborah Nason

When it comes to updating benefit packages every October, “most people run for the hills,” said Mark Germain, certified financial planner and founder and CEO of Beacon Wealth Management. “They wait until the last minute and just check off the boxes. And they don’t always seek out advice, because they don’t understand the options and don’t know what questions to ask.”

 Germain recommends that employees consider these three factors:
  • Anticipated expenses. “What will they be spending on in the next 12 months? Medical? Disability? Child care? Education? Legal? The single most important thing is, which options will be the least out of pocket for them in the coming year?”
  • 401(k) plan. Check to see if there is an employer match and if regular deposits are set up.
  • Long-term care insurance. “Some companies allow employees to buy this within the company plan. They need to understand that buying it now is cheaper than when they retire, and they may be able to convert this policy to a private plan and take it with them when they leave the company.”

October benefit planning is also an opportunity to link back to April 15.

“These [fall] benefit meetings with clients are a time to look at last year’s tax return and see what they can do differently with benefits to help next year’s taxes,” said John Gugle, CFP and principal at Alpha Financial Advisors. For example:

  • “If the employer offers a high-deductible health insurance plan, utilizing a Health Savings Account will result in a credit on your tax return.”
  • “Increasing your contribution to your 401(k) will reduce your taxable income, thus lowering your taxes,” Gugle said. “Check to see if you are enrolled in an automatic savings escalator, and find out if the plan allows a Roth option.”
  • “For those with deferred compensation plans, determine how much you want to defer in the coming year,” he said. “The more you defer, the less tax liability you will have, and you may even drop down a tax bracket.”

During the annual evaluation period, find out what new perks may be available. “One unusual benefit that I’m seeing more and more is a paid sabbatical,” Gugle said. “You are completely not allowed to work. I see this benefit being used to reward long-term key staff.”


You can find the original article at: http://www.cnbc.com/2016/10/05/why-its-important-to-review-workplace-benefits-in-october.html