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  • The competitive job market today makes it increasingly important to retain top talent. While employees may be staying in their current roles longer than they have before, businesses still face significant challenges when it comes to developing their workforce. Upskilling and reskilling have become top priorities for businesses of all sizes, but many are finding it difficult to implement these initiatives effectively. According to Springboard’s State of the Workforce Skills Gap 2024, over 63% of leaders say that upskilling is the top priority for solving their company skills gap in the next year, and 43% plan to invest in reskilling. 

    For organizations looking to stay competitive and ensure long-term success, it’s essential to have a clear strategy in place for reskilling and upskilling employees. At Group Management Services (GMS), we specialize in equipping businesses with the expertise and tools to identify skill gaps, train employees, and cultivate a culture of learning that fuels growth and innovation. 

    Identifying Skills Gaps And Strategic Planning 

    One of the biggest hurdles companies face is determining which skills their employees need to develop. Many businesses are unsure where to start, which can lead to a generalized approach that fails to address the most pressing skill gaps. The key to successful upskilling is narrowing down the critical skills your business will need for future success and then aligning those needs with current employee capabilities.  

    At GMS, we work with business leaders to help them identify these key skills and develop targeted training programs. Our employee management services include performance management systems that track progress and ensure that your workforce is evolving to meet the demands of tomorrow. Whether it’s tech skills, leadership development, or industry-specific training, GMS can help you build a reskilling roadmap tailored to your business’s unique needs. 

    Training That Works For Your Team 

    Once you’ve identified the skills your team needs to continue developing, it’s important to provide the proper training opportunities. However, finding relevant training is only part of the solution. Employees need the time and resources to take full advantage of these opportunities. At GMS, we understand that the logistics of upskilling can be complicated. From taking employees off the production line to giving them the flexibility to attend virtual workshops, we can help you create an environment where learning thrives without sacrificing productivity. 

    Our comprehensive human resources solutions provide access to training programs and other learning resources, all while ensuring your workforce can maintain a balance between learning and job responsibilities. We help you implement strategies to minimize short-term performance dips that can occur when employees are learning new skills, so your business stays on track. 

    Recruiting With Learning In Mind 

    It’s not just about training current employees; hiring the right talent plays a crucial role in your company’s long-term success. It is imperative to recruit candidates who not only have the necessary skills but also the motivation and ability to learn. At GMS, our recruiting services ensure that you’re hiring individuals who are both capable and adaptable. 

    Given the rapid pace of industry changes, hiring employees with the ability to learn quickly can be more valuable than finding someone who meets every technical requirement from the start. Our recruiting strategies emphasize finding individuals with the drive to continuously improve, ensuring your workforce remains adaptable. 

    How GMS Can Help You Succeed 

    At GMS, we know that upskilling and reskilling are more than just buzzwords; they’re essential strategies for retaining talent and staying competitive. Our team of experts provides the guidance and tools you need to effectively train your employees and fill the skills gaps in your workforce.  

    With GMS’s employee management services, you can navigate the complexities of workforce development and create a learning culture that promotes business success. Partner with us to enhance your recruiting, training, and performance management processes, ensuring that both your employees and your business are prepared for the future. 

  • The workplace of 2025 is prepared to look vastly different from the pre-pandemic world. As businesses adapt to new challenges and trends, the workplace shifts toward greater flexibility, technological advancements, and a renewed focus on employee well-being and diversity. These changes are not just temporary responses to the global crises of the past few years but are instead shaping the future of work. By understanding these trends, companies can stay ahead of the curve and better position themselves for long-term success. Here are a few trends to note for 2025:

    Hybrid Work Models Are Here To Stay

    The most visible change in the workplace is the increased prevalence of remote work. While many businesses initially turned to remote work as a necessary solution during the COVID-19 pandemic, this trend has become a permanent fixture for many organizations. By 2025, a significant number of employees will continue to work remotely, either full-time or in a hybrid model that combines remote work with occasional in-office days.  

    This transition offers both opportunities and challenges for businesses. By hiring remote employees, companies can tap into a broader talent pool, including individuals from various regions or countries. However, maintaining a unified company culture and collaboration among remote teams will necessitate careful planning and the adoption of new communication strategies. Flexibility is key, with many businesses redesigning office spaces to accommodate a more dynamic workforce.

    A Focus On Employee Health And Safety

    The pandemic heightened awareness around health and safety in the workplace, and this focus will only intensify in the coming years. Employers will continue to prioritize the well-being of their employees with investments in advanced health and safety protocols. Companies are also expected to implement more comprehensive mental health support programs, recognizing the toll that stress and anxiety have taken on employees over the past few years. 

    Additionally, the growing importance of health and wellness benefits will lead businesses to increase their offerings, from expanded employee assistance programs (EAPs) to virtual wellness services. By focusing on both physical and mental health, companies can create a supportive environment that helps employees thrive.

    Technology Integration And Automation

    The rapid acceleration of digital transformation during the pandemic has permanently changed how businesses operate. By 2025, companies will rely even more on advanced technologies like artificial intelligence and automation to streamline operations and enhance productivity. These tools will be essential for managing a dispersed workforce, as well as for training, collaboration, and customer service. 

    However, with increased automation comes the need for reskilling. As some tasks become automated, employees must develop new skills to stay relevant in the evolving job market. Companies that invest in reskilling programs will not only support their current workforce but will also ensure they have the talent needed to compete in an increasingly digital workplace.

    The Future Of Leadership

    The traditional command-and-control leadership style is being replaced by a more empathetic approach that prioritizes emotional intelligence. In 2025, expect to see leaders who are more attuned to their employees’ emotions, needs, and concerns. This trend will require leaders to be more self-aware, adaptable, and compassionate. By building strong team relationships, leaders can boost innovation, creativity, and growth, leading to greater success. 

    To support this shift, organizations will need to invest in training programs that help managers develop these skills. Embracing continuous learning and development is essential for creating an environment where employees can thrive. One effective way to achieve this is through a learning management system (LMS), which provides a structured platform for training and development. An LMS can offer a variety of courses and resources to help managers enhance their emotional intelligence and leadership capabilities. 

    The Importance of Looking Ahead 

    As these trends continue to shape the workplace, businesses must take proactive steps to prepare for the future. Planning for the coming years, rather than reacting to changes as they happen, is essential for maintaining a competitive edge. By adopting the right technologies, cultivating a flexible and inclusive culture, and prioritizing employee well-being, companies can position themselves for success in 2025 and beyond. 

    How GMS Can Help Your Business Navigate Workplace Changes 

    At GMS, we understand that staying ahead of these workplace trends can be challenging. That’s why we offer comprehensive HR solutions to help your business adapt to the evolving changes. From managing remote work policies to enhancing health and safety protocols, GMS provides the tools and expertise needed to ensure your company is prepared for the future. 

    Our services include: 

    • Human resources support: We help you create a flexible, diverse, and inclusive workplace while ensuring compliance with ever-changing regulations. 
    • Payroll and benefits administration: GMS simplifies your payroll processes and offers competitive benefits packages that support employee well-being. 
    • Workplace safety solutions: We assist in developing and implementing safety programs that protect your employees’ physical and mental health. 

    As you look ahead to 2025, now is the time to start planning for the future. Contact GMS for a quote and learn how we can help your business thrive in 2025! 

  • As the year draws to a close, businesses often focus on wrapping up key projects, finalizing budgets, and preparing for the upcoming year. One important aspect of employee management should not be overlooked: performance reviews.  

    Many companies treat performance reviews as a formal, once-a-year obligation, but this traditional approach can be outdated and ineffective. Instead, reevaluating and restructuring your performance review process can lead to better employee development, clearer communication, and overall improved business outcomes. In fact, companies that implement regular employee feedback have 14.9% lower turnover rates than those that do not. Additionally, 92% of employees want feedback more often than just once a year. 

    Why Performance Reviews Matter 

    At their core, performance reviews serve several vital functions: 

    • Clarifying expectations: Employees need to understand what’s expected of them to succeed in their roles. 
    • Identifying areas for improvement: A review is an opportunity to provide constructive feedback and help employees grow. 
    • Setting developmental goals: Performance reviews offer a space to outline specific, actionable goals for employee progress. 

    However, waiting an entire year to offer feedback or address concerns can make the process feel forced and less impactful. Employees may be unaware of how they are performing in real-time, making it harder for them to improve. The feedback also tends to be less relevant, as it may focus on events or actions from months earlier, missing the opportunity for ongoing growth and relationship-building. 

    Reevaluate Your Performance Review Process 

    One of the key reasons companies should consider revisiting their performance review structure is to create more timely and effective conversations between employees and managers. Traditional reviews often lead to a feeling of dread, stress, and inefficiency. Instead of waiting for year-end or mid-year check-ins, a more frequent review process—whether monthly, quarterly, or after significant milestones—can help streamline feedback and goal –setting. 

    More frequent performance evaluations allow managers to: 

    • Provide timely feedback: Employees benefit more from immediate feedback rather than waiting months to hear how they performed on a specific project or task. 
    • Address issues early: Ongoing reviews can help identify issues early, making it easier to adjust behaviors or strategies before they negatively affect performance. 
    • Promote continuous growth: Shorter, more focused reviews help managers guide employees in real-time, improving overall performance and productivity. 

    Structuring Reviews For Success 

    A performance review is only as effective as the preparation and structure behind it. Here are some best practices to follow: 

    • Consistent documentation: Keep detailed notes on employee performance throughout the year. This avoids the common pitfall of only focusing on recent actions or projects, ensuring a well-rounded review that highlights both strengths and areas for improvement. 
    • Standardized questions: Make sure to ask consistent questions across reviews to maintain fairness and transparency. This approach avoids biases and ensures that all employees are being evaluated on the same criteria. 
    • Active listening: Performance reviews should be a conversation, not a one-way critique. Give employees the space to express their thoughts and provide their own feedback on their performance and goals. 

    Start Preparing Now With GMS 

    As the end of the year approaches, now is the perfect time to reevaluate your performance review process. Moving away from outdated, annual reviews to a more frequent and structured approach not only improves employee satisfaction but also helps your business grow and thrive.  

    With the right tools, support, and guidance, GMS can help you optimize your performance management strategy, ensuring your team is set up for success in the coming year. GMS can help your company by: 

    • Streamlining the review process: We assist in setting up structured, consistent review schedules and processes tailored to your business needs. 
    • Providing performance management tools: Our services include performance tracking and management tools, ensuring that you and your managers can easily document and review employee performance throughout the year. 
    • Training managers: GMS offers training for managers on best practices for conducting performance reviews, giving feedback, and setting goals that drive employee success. 
    • Ensuring compliance and fairness: With GMS’s support, you can ensure your reviews are conducted fairly, legally, and in a way that promotes employee development and growth. 

    At GMS, we understand that managing employee performance reviews can be a daunting task for any business, especially when you’re trying to balance day-to-day operations. Let GMS assist in making your employee reviews a streamlined and productive process that supports both your employees and your business objectives. Reach out to us today to learn how we can partner with you in building a stronger, more efficient workforce. 

  • Significant updates are coming to 401(k) plans affecting employees across various industries. These changes, part of the SECURE 2.0 Act, are designed to enhance retirement savings opportunities and make retirement planning more accessible for all. Passed in late 2022, the SECURE 2.0 Act builds on the 2019 SECURE Act and includes over 90 provisions, some of which have already taken effect. The 401(k) updates for 2025 are particularly notable, offering expanded enrollment options, increased contribution limits, and greater flexibility for part-time workers. 

    Whether you’re just starting to save for retirement or already have a plan in place, it’s important to stay informed. Here’s a breakdown of the most significant changes to 401(k) plans coming in 2025: 

    Automatic Enrollment For New 401(k) Plans 

    Starting in 2025, all newly established 401(k) plans will automatically enroll eligible employees unless they opt-out. This provision aims to simplify the enrollment process and encourage more workers to begin saving for retirement as soon as they are eligible.  

    Employers with fewer than 10 employees or businesses under three years old are not required to automatically enroll. Government and church plans are also exempt from this rule.  

    Employers can set an initial contribution rate between 3% and 10% of an employee’s salary, with many opting for a rate around 6%. Each year, the contribution rate will automatically increase by 1% until it reaches the employer’s predetermined cap, which could be as high as 15%. This means that employees will have the chance to gradually increase their retirement contributions without needing to take any action. 

    Faster 401(k) Eligibility For Part-Time Employees 

    Currently, part-time employees need to work 500 hours over three consecutive years or 1,000 hours in one year to qualify for their employer’s 401(k) plan. However, beginning in 2025, that eligibility window will be shortened to two years instead of three. 

    This adjustment is excellent news for part-time workers, especially those who juggle multiple jobs. Keep in mind if you contribute to multiple 401(k) plans with different employers, your total contributions across all plans must not exceed the annual limit, which is set at $23,000 for 2024. 

    Higher Catch-Up Contributions 

    The SECURE 2.0 Act acknowledges the financial concerns of older workers, many of whom worry they haven’t saved enough for retirement. Starting in 2025, employees aged 60 to 63 will have the opportunity to make larger catch-up contributions than those in their 50s. The new limit will be set at either $10,000 or 50% more than the standard catch-up contribution limit, whichever is greater.  

    For example, if the catch-up contribution limit for 2025 remains at $7,500, workers between the ages of 60 and 63 can contribute up to $11,250. These limits will be adjusted annually to account for inflation, ensuring that employees can continue to maximize their retirement savings as costs rise. 

    How GMS Can Help 

    401(k) plan requirements are constantly changing, and with the new SECURE 2.0 provisions, businesses must stay on top of compliance while offering competitive benefits. At Group Management Services (GMS), we understand the importance of providing attractive retirement plans for your employees. Our team of retirement experts is here to help you navigate these changes, ensuring that your 401(k) offerings are compliant, competitive, and designed to meet the needs of your workforce. 

    Whether you’re looking to enhance your current retirement plans or want to explore new options, GMS can provide the guidance and support you need. Contact us today, and let us help you build a plan that works for both your business and your employees’ future.  

  • With open enrollment quickly approaching for many businesses, it’s important to take the time to review your current health care offerings and benefits plans. Regardless of your team’s size, investing in health care is essential as it significantly impacts the health, wellness, and happiness of your most valuable asset: your employees. Choosing the best health plan and benefits can be overwhelming, but it doesn’t have to be.  

    Open Enrollment 

    Open enrollment occurs annually, providing individuals the opportunity to enroll in or change their health care plan or other benefits. Individuals can review or update their existing coverage to meet their current needs; they can enroll in a new health care plan, modify their coverage levels, adjust their contributions, add beneficiaries, and more. Common benefits that individuals update are dental, retirement, vision, and more.  

    Open enrollment is a crucial period for employers and employees, as it is the only time when changes to health care plans and benefits can be made. There are some exceptions to this rule, such as experiencing a qualifying life event like having a child, getting married, or getting a divorce.  

    With rising health care costs, individuals are prioritizing utilizing affordable health care and benefits plans. This trend enhances the appeal of employers who offer comprehensive benefits packages to potential employees. In fact, 57% of U.S. workers have taken a new job if it provided better family and reproductive benefits.  

    Tips For Open Enrollment Season 

    As an employer, reviewing current policies or selecting the right health care plan for your employees during open enrollment can be overwhelming. However, there are a variety of strategies that can help you prepare and streamline the open enrollment process. 

    Make a schedule 

    Due to the hard cut-off date of the open enrollment period, marking your calendar with important dates and deadlines is essential. This year, open enrollment for HealthCare.gov begins on November 1, 2024, and ends on January 15, 2025. Consistently communicate with your employees about your important dates to ensure they are well-prepared and ready to submit their information to secure coverage for the upcoming year.  

    Offer personalized benefits options 

    As an employer, transparency and open communication are vital to a seamless open enrollment process. While there are many different coverage options and plans for your employees, it’s important to understand your employees’ priorities, their thoughts on their current plans, and updates or changes they’d like to see made. This can be done with an employee survey, a meeting, or a company-wide email. Offering a benefits plan that satisfies your employees will likely result in a more engaged, productive, and happy workforce. 

    In recent years, employees have been more strategic and thoughtful about their benefits selections. Employees are taking a more holistic perspective toward their health, and they want a strong, comprehensive benefits package to mirror that. Seventy-nine percent of employed individuals express interest in receiving support to maximize their workplace benefits dollars across retirement savings, health savings accounts (HSAs), health care insurance, and voluntary benefits.  

    Research coverage options 

    To ensure you are offering the best plans to your employees, it’s important to review your current coverage options and research potential alternatives. It’s crucial to check available providers and ensure they match your employee’s’ needs in terms of cost, services, and amount of coverage. To enhance your research process, consider the following steps: 

    Conduct employee surveys 

    By conducting an employee survey about your current coverage offerings, you’ll gain a greater understanding of what your employees are looking for with their health care options. When you utilize this feedback, you’ll be able to choose the best coverage that align with your employees’ wants and needs, potentially improving employee happiness and retention.  

    Compare coverage 

    As an employer, it’s crucial to benchmark health care coverage with federal standards to ensure that employees receive comprehensive and competitive benefits. It can also be helpful to compare your health care offerings with other companies in the same industry, to determine how your company’s current coverage compares to competitors or if any changes need to be made.  

    Keep your employees educated 

    As an employer, you need to make sure your employees understand their available coverage options, potential updates they can make, and possible costs. Open enrollment can be challenging, and providing resources to help employees better understand the process and the benefits available to them can significantly enhance their satisfaction with their plans. Providing resources like webinars, emails, guides, and insurance marketplace updates is a great way to keep your employees informed about the latest open enrollment information. 

    Open Enrollment Assistance 

    It’s never too early to start thinking about open enrollment. Ensuring your employees have a seamless enrollment process may seem daunting, but it doesn’t have to be. With a professional employer organization (PEO) like Group Management Services (GMS), you gain access to a dedicated HR team to help answer questions about open enrollment. GMS can also help reduce costs and administrative burdens while providing your employees with quality medical coverage. With our in-house master health plan, you can also avoid large swings in usage and renewal rates.  

    For more information about how GMS can help you navigate open enrollment, contact us today! 

  • Understanding CalSavers: A Mandate For Employers 

    California’s CalSavers Retirement Savings Program is a state-mandated initiative designed to ensure that employees across the state have access to retirement savings options. All California employers with five or more employees must either offer a private retirement plan or facilitate access to CalSavers for their employees.  

    With CalSavers, small businesses can keep employees engaged and attract new talent without incurring the overhead and administrative costs of a retirement plan. This law also aims to address the growing retirement savings gap, especially among workers who do not have access to employer-sponsored retirement plans. 

    How CalSavers Works 

    CalSavers is an automatic enrollment program, meaning eligible employees are automatically enrolled unless they opt-out. Contributions are made through payroll deductions, and employees can choose to save a portion of their wages into a Roth IRA. The program is designed to be simple for both employers and employees, without employer fees or fiduciary responsibilities. Employers are required to register with CalSavers and upload their employee roster, after which employees are notified of their enrollment. 

    Key Features Of CalSavers 

    • Automatic enrollment: Employees are automatically enrolled but have the option to opt-out. 
    • Roth IRA contributions: Employees contribute post-tax dollars, with a default contribution rate of 5%, though they can adjust this rate. 
    • Portability: The account is tied to the individual, not the employer, meaning employees can take their savings with them if they change jobs. 

    Newly mandated businesses with five or more employees must register by the end of the calendar year in which they become subject to the mandate. Business size is based on the average number of employees reported to the Employment Development Department on the four DE9C filings from the previous year. 

    Beyond California: Similar Programs In Other States 

    California isn’t alone in implementing a state-mandated retirement savings program. Several other states, including Oregon, Illinois, Colorado, and New York, have launched or are in the process of launching similar initiatives.  

    These programs share a common goal: to increase retirement savings among workers and reduce the burden on public assistance programs. For employers operating in multiple states, these varying requirements can become complex and challenging to manage. Each state’s program may have different deadlines, contribution rates, and administrative requirements, making compliance a potential headache for businesses. 

    How GMS Can Help  

    Navigating the intricacies of state-mandated retirement programs like CalSavers can be challenging, especially for businesses operating in multiple states. GMS is here to simplify the process. Our experts stay up-to-date with the latest regulatory changes across the country, ensuring that your business remains compliant no matter where you operate. We can help you implement and manage retirement savings programs that meet state requirements, so you can focus on growing your business while we handle the complexities of compliance. 

    Whether your business is in California, Colorado, New York, or any other state with similar mandates, GMS provides the support you need to stay ahead of these changes. Contact us today to learn more about how we can assist you in navigating retirement savings laws and ensuring your business remains compliant nationwide.  

  • As life expectancy increases and social security benefits remain uncertain, the importance of personal retirement savings grows. Vanguard’s How America Saves 2023 report found that more Americans than ever before (83%) are actively saving for retirement. This number is up eight percentage points since 2013.

    One critical component of a robust retirement plan is the employer’s contribution to an employee’s retirement savings. These contributions significantly enhance employees’ ability to build a substantial nest egg for their retirement. Not all companies provide 401(k) matching programs, but by investing in your employees’ future, you demonstrate that you value them beyond their contributions to the workplace. This commitment enhances your appeal as a competitive employer, aiding in both recruitment and retention.

    Understanding Employer Contributions

    Employer contributions refer to the funds that employers add to their employees’ retirement savings accounts, such as 401(k) plans, 403(b) plans, or other defined contribution plans. These contributions can come in various forms, including matching, non-elective, and profit-sharing contributions.

    Employer contributions are a popular benefit, especially in companies offering a 401(k) plan. In 2021, ICI Research found that 90% of 401(k) plan participants received employer contributions to their retirement savings. The average employer contribution across plans reached a record high of 4.8% in Q1 of 2023.

    Three Types Of Employer Contributions

    The type of contribution you offer employees will ultimately depend on several factors, including company financial health, competitive considerations, employee needs and preferences, regulatory requirements, and the overall benefits strategy. There are three popular types of contributions to choose from.

    1. Matching contributions

    Employers match a percentage of the employee’s contributions to their retirement account. For example, an employer might match 50% of the employee’s contributions up to 6% of their salary. If an employee earns $50,000 annually and contributes 6% ($3,000) to their 401(k), the employer would contribute an additional $1,500.

    1. Non-elective contributions

    Employers contribute a fixed amount to employee retirement accounts regardless of whether the employee makes their contributions. This ensures that all eligible employees receive a retirement benefit.

    1. Profit-sharing contributions

    Employers share a portion of the   with employees by contributing to their retirement accounts. This type of contribution can vary yearly based on the company’s profitability.

    Benefits Of Employer Contributions

    Benefits for employees:

    Increased retirement savings

    Employer contributions significantly boost the total retirement savings of employees. For instance, an employer match can add thousands of dollars to an employee’s retirement fund over time, which can compound and grow substantially.

    Incentive to save

    Matching contributions are a powerful incentive for employees to contribute to their retirement accounts. Knowing that their employer will add extra money if they save encourages employees to participate in retirement plans and contribute more than they might have otherwise.

    Tax advantages

    Employer contributions, like employee contributions, often come with tax benefits. Contributions to retirement accounts are typically made on a pre-tax basis, reducing the employee’s taxable income. Additionally, the growth of these contributions is tax-deferred until withdrawal.

    Financial security

    With employer contributions, employees can feel more secure about their financial future. The additional funds help build a larger retirement cushion, which is crucial for maintaining a comfortable lifestyle in retirement.

    Benefits for employers:

    Attracting and retaining talent

    Offering competitive retirement benefits, including employer contributions, helps attract top talent. Employees value retirement benefits, and a generous contribution policy can be a crucial differentiator in a competitive job market.

    Employee satisfaction and loyalty

    Retirement contributions are a form of investment in employees’ futures, which can lead to increased job satisfaction and loyalty. Employees who feel supported in their long-term financial goals are more likely to remain with the company and contribute positively to its success.

    Tax deductions

    Employers can benefit from tax deductions for their contributions to employees’ retirement plans. These deductions can offset some of the costs associated with providing these benefits.

    Enhanced company culture

    Providing robust retirement benefits can enhance the overall company culture. It demonstrates that you value your team and are committed to their long-term well-being.

    The Impact Of Employer Contributions On Retirement Savings

    The additional funds from employer contributions can significantly enhance the compounding effect: the more money invested early on, the more potential for growth over time. For instance, a $1,000 contribution at age 30 can grow significantly more than a $1,000 contribution at age 50 due to the longer time for compounding. Additionally, employer contributions can: 

    • Increase participation rates: Employer matching contributions often lead to higher participation rates in retirement plans. Employees are more likely to enroll and contribute to their plans when they know they will receive additional funds from their employer.
    • Balance retirement portfolios: Employees can diversify their retirement portfolios more effectively with additional contributions. This diversification can help manage risk and potentially lead to better investment outcomes over the long term.
    • Reduce retirement savings gaps: Employer contributions help bridge the retirement savings gap, particularly for employees who cannot contribute significantly. This is especially important for lower-income workers who might otherwise struggle to save adequately for retirement.

    Managing And Planning Employer Contributions With GMS

    Employer contributions to employee retirement savings are a vital component of a successful retirement plan. They provide significant financial benefits, savings incentives, and enhanced economic security for employees. For employers, offering generous retirement contributions can attract and retain top talent, foster loyalty, and improve company culture.

    By understanding the types of employer contributions and strategies for maximizing their benefits, employees can ensure they are well-prepared for a financially secure retirement. Ultimately, employer contributions not only support individual employees but also contribute to a more stable and prosperous workforce.

    If you’re thinking about offering your employees a retirement plan, consider partnering with a professional employer organization (PEO) like Group Management Services (GMS). With experience supporting over 3,500 businesses in managing payroll, human resources, risk management, and benefits, including 401(k) plans, GMS provides affordable solutions comparable to larger corporations.

    Interested in enhancing your business’s retirement plan offerings? Learn more about how GMS can support your company’s needs. 

  • Selecting the right retirement plan for your small business is a crucial decision that can impact your ability to attract and retain talent. It’s essential to carefully evaluate your business’s needs and goals to choose the most suitable retirement plan. Numerous options are available, each with its own rules, benefits, and limitations. Knowing the pros and cons of each one can help you make an informed decision.

    Why Offer A Retirement Plan?

    The Center for Retirement Research found that only 46% of small businesses offered a retirement plan. A 2023 Capital Group survey reported that 40% of small business owners didn’t believe their company was large enough for a retirement plan option. The same study found that 32% of small business owners feel they lack the knowledge to offer retirement plans while keeping their businesses afloat.

    However, despite these hesitations, there are several compelling reasons why offering a retirement plan will benefit your small business:

    • Attract and retain talent: A competitive retirement plan can help you stand out to potential employees and retain current ones. Many job seekers consider retirement benefits a key factor when evaluating job offers.
    • Tax advantages: Retirement plans can provide significant tax advantages for both employers and employees. Employer contributions are typically tax-deductible, and employees can defer taxes on their retirement savings until withdrawal. Additionally, the SECURE Act of 2022 offers a tax credit to small businesses that offer retirement plans and a bonus credit if that plan offers automatic enrollment.
    • Employee financial security: Helping employees save for retirement can increase their economic security and overall job satisfaction, leading to a more motivated and productive workforce.
    • Owner benefits: As a business owner, you can also personally benefit from a retirement plan by saving for your retirement in a tax-advantaged manner.

    Types Of Retirement Plans For Small Businesses

    Choosing the right plan for you and your team can be a complex process; the most common options include:

    Simplified Employee Pension (SEP) Individual Retirement Account (IRA)

    SEP IRAs are designed for self-employed individuals and small business owners. They are easy to set up and maintain, with low administrative costs. Only the employer contributes to the plan, and contribution limits are high. Employers can contribute up to 25% of each employees’ compensation, up to a maximum of $69,000 for 2024. Contributions are tax-deductible for the employer, and employees are immediately 100% vested in their SEP IRAs.

    Pros:

    • Simple to administer.
    • Flexible annual contributions, allowing adjustments based on your business profitability.
    • High contribution limits.

    Cons:

    • Only the employer can contribute.
    • Contribution amounts must be the same percentage for all eligible employees.

    Savings Incentive Match Plan For Employees (SIMPLE) IRA

    SIMPLE IRAs are ideal for businesses with 100 or fewer employees. They are relatively easy to set up and administer. Both employers and employees can contribute to the plan. Employees can contribute up to $16,000 annually for 2024, with an additional $3,500 catch-up contribution for those aged 50 and over.

    Employers must match employee contributions dollar-for-dollar up to 3% of compensation or make a 2% non-elective contribution for all eligible employees. Employer contributions are tax-deductible.

    Pros:

    • Easy to set up and manage.
    • Encourages employee participation through matching contributions.
    • Lower administrative costs compared to 401(k) plans.

    Cons:

    • Lower contribution limits compared to SEP IRAs and 401(k) plans.
    • Employer contributions are mandatory, which can financially burden some businesses.

    401(k) Plan

    401(k) plans are one of the most popular retirement plans for businesses of all sizes. These plans can include features such as Roth contributions, loan provisions, and automatic enrollment. They offer flexibility and higher contribution limits.

    Both employers and employees can contribute to the plan. Employees can contribute up to $23,000 annually for 2024, with an additional $7,500 catch-up contribution for those aged 50 and over. Employers can choose to match employee contributions or make non-elective contributions. All employer contributions are tax-deductible. Employers can also set up profit-sharing contributions.

    Pros:

    • High contribution limits.
    • Flexibility in plan design and employer contributions.
    • Encourages significant employee participation and savings.
    • Attractive to potential employees.

    Cons:

    • Higher administrative and compliance costs.
    • It is more complex to set up and maintain than SEP and SIMPLE IRAs.

    Defined Benefit Plan

    Defined benefit plans, or pension plans, promise a specific retirement benefit amount based on a formula considering factors such as salary history and years of service. In this plan, the employer contributes enough to fund the promised benefit. According to the IRS, this amount is “100% of the participant’s average compensation for his or her highest three consecutive calendar years or $275,000 for 2024.” This plan’s higher contribution limits allow for potentially substantial retirement savings.

    Pros:

    • Provides a guaranteed retirement benefit.
    • High contribution limits.
    • Attractive to employees seeking retirement security.

    Cons:

    • Complex and costly to administer.
    • Employer bears investment risk and funding responsibility.
    • Less flexibility in adjusting contribution amounts.

    Factors To Consider When Choosing A Retirement Plan

    1. Business size and structure: The number of employees and your business structure (e.g., sole proprietorship, partnership, corporation) can influence the suitability of different plans. However, don’t let size be your reason for avoiding a plan altogether. The Employee Benefit Research Institute found that a business that is too small or not established enough was the most cited reason for not offering a plan. In many cases, this isn’t true.
    2. Employee needs and preferences: Understanding your employees’ retirement goals and preferences can help you choose a plan that meets their needs and encourages participation.
    3. Budget and administrative capacity: Consider the costs of setting up and maintaining the plan, including administrative fees and required employer contributions.
    4. Tax benefits: Assess the tax advantages of different plans for the business and employees.
    5. Flexibility and customization: Some plans offer more flexibility regarding contributions, investment options, and plan features. Determine how much flexibility you need to meet your business and employee needs.

    By understanding the different types of retirement plans available and their respective benefits and limitations, you can select a plan that not only helps you attract and retain top talent but also provides valuable financial security for you and your employees.

    The good news is you don’t have to do it alone.

    A professional employer organization (PEO), like GMS, can transform your small business’s retirement plan offerings. With a proven track record of helping over 3,500 companies with p and 401(k) plans, GMS delivers cost-effective solutions that rival larger firms.

    Ready to elevate your retirement benefits? Click here to learn more about how GMS can help you set up a retirement plan best suited for your small business.

  • While it’s crucial to foster a positive work culture and build a reputation as a caring employer, evaluating the benefits you offer is equally important. With inflation and the rising cost of living, nearly 79% of Americans believe the country is facing a retirement savings crisis, and 55% are concerned with securing enough financial stability for their retirement.

    Financial insecurity can be a major stressor. It can affect productivity, leading to disengagement and absenteeism in the long term.  You can alleviate some of this stress by offering a 401(k) plan to help your team prepare for retirement. Most people aim to spend their later years comfortably enjoying their retirement, so providing a quality 401(k) plan can help your business attract and retain quality employees.

    Avoid Financial Confusion: Educate Your Group

    Retirement is not always straightforward, as financial choices can be intimidating and confusing for many employees. However, understanding retirement plans like a 401(k) is critical. Ensure you’re taking the time to review educational resources or training with your team to eliminate confusion and simplify choices.

    What is a 401(k) Plan? 

    Seven Elements Of A Competitive 401(k) Plan

    1. Generous employer match

    A generous employer match is one of the most sought-after features in a 401(k) plan. An employer match is when an employee contributes a portion of their salary to their retirement account, and the employer matches a certain percentage of that contribution, effectively adding free money to the employee’s retirement savings. According to Vanguard’s annual report on investing behavior, employers’ average match was 4.6% of pay, while the highest percentage was 6.99%. 

    A higher match not only demonstrates that you value the long-term financial wellness of your workforce but also serves as a powerful incentive for employees to contribute more to their retirement accounts. It effectively doubles the impact of their contributions, making it a highly attractive benefit. Employees view a strong match as a direct investment in their future, which can be a critical factor in recruitment and retention. By offering a generous employer match, you can differentiate your company in a competitive job market and build a stronger, more loyal team.

    2. “Day one” eligibility

    “Day one eligibility” refers to a policy where employees are eligible to participate in certain benefits, such as a 401(k) plan from their first day of employment. This means that new hires do not have to wait through a probationary period or a set number of days before they can begin contributing to a retirement plan. Providing new hires with immediate eligibility helps ensure they don’t lose ground in terms of saving. Seventy-four percent of plans now allow workers to make pretax contributions immediately after hire. In addition, 53% of plans have corresponding immediate eligibility for employer-matching contributions, while 50% of plans that offer a non-matching employer contribution allow immediate eligibility.

    3. Immediate vesting schedule

    An immediate vesting schedule allows employees to gain full ownership of employer contributions from the moment they are made. Unlike traditional vesting schedules, which may require employees to stay with a company for several years before they can access the full benefits of their employer’s match, immediate vesting grants instant control over contributions. It gives employees the peace of mind that the contributions made on their behalf are truly theirs to keep, regardless of their tenure with the company.

    While it might seem counterintuitive, offering an immediate vesting schedule can be a powerful tool to attract top talent, especially in competitive industries. It signals a commitment to your team’s financial security. It shows that you’re confident in your business’s value without the need to tie employees down with restrictive vesting terms. Additionally, it can lead to greater employee satisfaction and loyalty, as workers feel more secure in their financial planning and more appreciated by their employer.

    4. Low, transparent plan fees

    Typically, 401(k) plans have administrative fees that charge you to maintain the account. Admin fees cover record keeping, accounting, legal services, and investor education services.  Investment fees on the other hand cover expenses associated with managing the plan’s funds.

    Both types of fees are deducted from your employees’ 401(k) assets. Finding plans with lower fees and educating your employees on how the fees are being applied can help set your company’s 401(k) package apart from your competition.

    5. Investment options

    When finding a 401(k) plan, select only a handful of investment options. This can include individual mutual funds, asset allocation funds, and target-date funds, many of which automatically become more conservative as the employees approach retirement. 

    While offering choices is beneficial, it’s important not to overload your team. It’s possible to present employees with too many options. Researchers have found that for every 10 options added to your plan, participation drops by 1.5-2%. To avoid overwhelming your employees, be selective in the choices you put in front of your team.

    6. Automatic enrollment and raises

    Automatic 401(k) plan enrollment has gained popularity for its ability to simplify retirement savings. With automatic enrollment, employees are enrolled in the company’s 401(k) plan by default, often with a pre-set contribution rate, unless they choose to opt-out.

    Automatic enrollment can significantly increase participation rates in 401(k) plans by nearly 15%, particularly among younger or new employees. It eliminates common barriers to entry, such as the initial sign up or the uncertainty about how much to contribute. By making retirement savings the default option, you can help your staff build financial security from day one.

    In addition to automatic enrollment, including automatic contribution raises (often referred to as automatic escalation) further enhances the effectiveness of a 401(k) plan. Automatic raises typically increase an employee’s contribution rate by a set percentage each year, usually aligned with annual salary increases or at the start of a new plan year.

    7. Give employees access to expert financial resources

    Providing employees with access to expert financial resources is essential to a well-rounded 401(k) plan. Many employees, especially those new to investing or retirement planning, may feel overwhelmed or uncertain about maximizing their 401(k) options. By providing access to financial advisors, educational workshops, and online tools, employers can empower their workforce to make informed decisions about their financial future.

    401(k) Plans With GMS

    If you’re looking to offer a competitive retirement plan but don’t have the time or energy to dedicate to finding one, we can help. Partnering with a professional employer organization (PEO), like GMS, ensures you can offer the best plan for your team without the hassle. Our retirement experts will help you find the best options for you and your team to remain competitive in today’s tightening labor force. Contact us today and connect with one of our experts!

  • A Texas federal judge recently struck down the Federal Trade Commission’s (FTC) proposed nationwide ban on non-compete agreements, which was set to take effect in early September. This ruling means that employers can continue to enforce non-compete clauses according to their state laws. However, with ongoing legal challenges and the evolving regulatory landscape, it’s crucial for employers to stay informed and prepared for potential changes.  

    Understanding The Ruling 

    The FTC’s proposed rule aimed to ban non-compete agreements nationwide, a move that was met with significant pushback from the business community. In response, a Texas employer, the U.S. Chamber of Commerce, and other organizations filed a lawsuit challenging the FTC’s authority to impose such a ban. The case was heard by Judge Ada Brown of the Northern District of Texas, who ruled that the FTC overstepped its authority and the proposed ban was invalid. 

    Judge Brown’s decision was based on two key arguments: 

    1. The FTC does not have the power to issue substantive rules, as Congress only authorized the agency to establish procedural rules to address unfair competition.
    2. The rule itself was deemed “arbitrary and capricious” due to its broad and blanket approach, which failed to consider state-specific laws.

    As a result of this ruling, the non-compete ban has been blocked nationwide, allowing employers to continue using non-compete agreements as permitted by state law. 

    Why You Should Stay Informed 

    While the immediate threat of a nationwide ban has been neutralized, the FTC may appeal the ruling in the coming weeks. That said, employers should remain vigilant. The FTC may still pursue case-by-case enforcement actions against non-compete agreements, and the legal landscape could shift again if higher courts weigh in. Now is the time for employers to ensure their non-competes are compliant with state laws and tailored to protect their business interests without overreaching.  

    Implications For Employers 

    Employers should review their existing non-compete agreements and ensure they are narrowly tailored to meet the specific requirements of the states where they operate. It’s also wise to compile an inventory of all restrictive covenants, including those involving former employees, to ensure you are prepared for potential future legal challenges. 

    Partner with GMS To Navigate Complex Employment Laws 

    Navigating the complexities of employment law, especially with the potential for rapid changes, can be challenging. That’s where GMS comes in. As a professional employer organization (PEO), we provide comprehensive support to help you stay compliant with the latest rules and regulations, including those surrounding non-compete agreements. Our expert team keeps you informed and ensures that your business is protected while allowing you to focus on growing your business.  

    Stay informed, stay compliant, and let GMS be your partner in navigating the complexities of employment law. Contact us today to learn how we can help your business succeed in an ever-changing legal environment.