Walking the Line.

• Author: Christensen, Annette Colton
• Position: Benefits and cost controll - Brief Article

Maximizing benefits while controlling costs

With enough strategy and research, each employer can custom-design a plan to attract and retain employees while building assets and boosting growth.

In Utah's competitive employment environment, it is increasingly important for the state's 66,400 employers to strategically implement compensation and benefit programs that will allow them to attract and retain the best employees. Researching retirement, health, and welfare options up front may decrease the expense of providing these benefits, thereby increasing the value of such plans.

Tax-Qualified Retirement Plans

Tax-qualified retirement plans include 401(k), profit-sharing, defined benefit pension and employee stock ownership. Such plans are "tax-qualified" because employer contributions are tax deductible and assets grow tax-free until they are withdrawn.

Like most employers offering retirement benefits today, Daw Technologies Inc., a supplier of ultra-clean manufacturing environments (clean rooms) in Salt Lake City, offers its employees a 401(k) plan. According to Daw Human Resource Director Ray Hawkins, 65 percent of eligible Daw employees participate. "The 401(k) offers a wonderful source of encouragement for employees to prepare for their retirement," says Hawkins. "Without a 401(k), it becomes very difficult to recruit top employees."

In fact, 401(k)'s have become so popular that a recent survey conducted by The Employers Council, a non-profit association of employers throughout the Intermountain West, reports that about 80 percent of survey participants offer a 401(k) plan to employees. Of those companies, the majority report participation rates of more than 51 percent.

But 401(k)'s are only one of many tax-qualified options employers can offer. Companies should consider all tax-deferred plans before adopting any program. Here are some questions to consider:

* Will the retirement benefits be tailored differently for each employee level?

* Am I obligated to fund a pension benefit that my employees cannot receive until retirement age?

* How much does each plan cost to administer?

* Who do I want to administer the plan and what should I expect from those professionals?

* What are my fiduciary responsibilities and potential liabilities?

* How do I want the assets invested and am I getting the most out of my assetmanagement team?

Deferred Compensation and Stock Option Plans

Generally, deferred compensation arrangements and stock option plans...