Agenda - 05-11-1999 - 4 - Laserfiche WebLink

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7. Benefits to the County ❑ An employer contribution to the 401(k) plan would support the County in recruitment as it competes with other local government employers and private employers. Attachment 2 shows area local governments with supplement retirement contributions. There are about 140,000 active plan participants state -wide. About 242 local government employers state -wide make an employer contribution to the plan for general government employees, including 38 counties. ❑ An employer contribution to the 401(k) has cost savings to the County over cash payments. An employer contribution to a 401(k) plan is a declared expenditure for public purpose and therefore exempt from FICA and Retirement contributions. ❑ An employer contribution to the 401(k) plan also would offer some disability protection wherein employees can access money through the loan and hardship provisions. Currently the County does not offer an employer paid disability insurance plan. Some local government employers in the area offer short-term and/or long -term disability coverage. Unlike making premium payments to purchase disability insurance, money contributed to a 401(k) plan is there and available to the employee for a variety of financial hardships. ❑ An employer contribution to the 401(k) plan would significantly increase employee morale. It is most appreciated by employees that their employer is helping to plan for future retirement as well as meet immediate needs such as college tuition, medical expenses, purchase of a primary residence, or the like. ❑ An employer contribution to the 401(k) plan would offer additional incentive for voluntary participation. ❑ An employer contribution to the 401(k) plan would support the County's efforts in retaining qualified employees as it competes with other local government employers and private employers. 8. Types of Employer Contributions There are three forms in which an employer contribution may be made to the 401(k) Plan. These are listed and described below. a. Across the Board Contribution Option (1) An across the board contribution is one in which the County makes a employer paid contribution to employees without regard to whether or not the employee makes a contribution. An across the board contribution may be a fixed percent of salary or a flat dollar amount provided that each employee receives the same contribution. (2) Of the 242 local government employers who make a 401(k) contribution, 201 (83 percent) make an across the board contribution.