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  • In today’s competitive job market, employee benefits are more critical than ever. As we look ahead to 2025, the demand for comprehensive, flexible, and tailored benefits packages is only expected to grow. Small businesses, in particular, may feel challenged to keep up with larger companies that have greater resources to devote to benefits. But with strategic planning, even smaller organizations can offer in-demand benefits that can attract and retain top talent.

    Health Care Benefits That Go Beyond The Basics

    Health care remains a top priority for employees, with benefits such as medical, dental, and vision coverage being nearly universal expectations. But in 2025, employees are looking for more than just basic health plans. Telemedicine, mental health resources, and wellness programs are becoming increasingly popular.

    • Telemedicine and virtual health care: Employees value the convenience and flexibility of telemedicine, especially for routine check-ups and non-emergency consultations. Small businesses can offer access to telemedicine services, which are typically affordable and easy to add to existing plans.
    • Mental health support: Mental wellness is now recognized as a vital piece of overall employee health. Offering access to counseling, mental health apps, or employee assistance programs (EAPs) demonstrates a commitment to employee well-being.
    • Wellness programs: Programs that encourage healthy living appeal to employees who want to prioritize their health. These benefits can include gym memberships, wellness coaching, and more.

    Competitive Retirement Plans To Secure Employees’ Futures

    With the Internal Revenue Service (IRS) increasing retirement plan contribution limits in 2025, employees should be more aware now than ever of the importance of securing their financial future. A well-structured retirement plan can be a powerful tool in attracting talent. Employers should consider offering incentives such as:

    • 401(k) matching contributions: Offering a company match on 401(k) contributions is an attractive benefit for employees, providing immediate financial value. Even a modest match such as 3% can help retain employees and show commitment to their long-term financial well-being.
    • Automatic enrollment and Roth 401(k) options: Automatic enrollment helps increase participation rates and simplifies the process for employees. As part of the SECURE 2.0 Act, all newly established 401(k) plans will automatically enroll eligible employees unless they opt-out. Roth 401(k) options, which offer tax-free withdrawals in retirement, are also popular among employees looking for tax-advantaged retirement strategies.

    Flexible Work Options For A Better Work-Life Balance

    The demand for flexible work options has only intensified post-pandemic, with many employees now expecting remote work, hybrid arrangements, or flexible schedules as standards.

    • Remote and hybrid work arrangements: Flexibility is no longer just a perk; it’s a priority for many employees. Businesses can appeal to top talent by offering options to work from home, even if just part of the time.
    • Flexible scheduling: Employees appreciate the ability to adjust their work hours to accommodate personal responsibilities, whether it’s picking up children from school or attending a doctor’s appointment. Flexible scheduling supports a work-life balance and reduces burnout.

    Paid Family Leave And Expanded Leave Options

    With work-life balance being a high priority for employees, having comprehensive leave policies in place are increasingly important. Employees expect to see options for paid parental leave, family medical leave, and even leave for mental health days.

    • Parental and family leave: Offering paid time off (PTO) for new parents or employees caring for a sick family member demonstrates empathy and builds loyalty. Small businesses may not be able to offer extensive leave but can explore affordable options to support employees during these life changes.
    • Paid time off flexibility: Employees appreciate flexible PTO policies, such as consolidated leave or even unlimited PTO. Flexible policies allow employees to take time off without worrying about strict caps or regulations, fostering a culture of trust and respect.

    Career Development And Educational Benefits

    Employees, especially Millennials and Generation Z, want jobs that offer growth and development opportunities. Providing access to career development resources is another powerful way to attract and retain ambitious, forward-looking employees.

    • Professional development programs: Opportunities for skill-building through workshops, courses, or seminars can make your company more attractive to candidates eager to learn. Many small businesses partner with online learning platforms to offer employees free or discounted courses.
    • Tuition reimbursement: While this benefit can be costly, it’s also highly attractive for employees interested in furthering their education. Offering partial tuition reimbursement can be a more affordable way to provide this benefit without full financial commitment.

    Financial Wellness And Student Loan Assistance

    Financial wellness benefits, such as student loan assistance, are in high demand, particularly among younger employees who may be carrying educational debt.

    • Student loan repayment assistance: Many employees still face significant student loan debt. Offering a student loan assistance program can make your business especially attractive to candidates early in their careers.
    • Financial education programs: Resources such as financial planning workshops or one-on-one consultations with financial advisors can help employees make informed financial decisions and feel more secure in their financial well-being.

    A Strong Company Culture To Complement Benefits Offerings

    A positive workplace culture is just as important to employees as specific benefits offerings. Some ways to encourage a healthy company culture include:

    • Team-building activities: Organizing events and initiatives encourages collaboration and camaraderie among staff, strengthening team dynamics.

    How Small Businesses Can Compete

    Offering competitive benefits doesn’t necessarily mean matching larger companies dollar-for-dollar. Small businesses can strategically focus on benefits that their employees value most and find creative ways to deliver them. By prioritizing employee needs, open communication, and being transparent about available resources, smaller companies can attract and retain talent effectively.

    At GMS, we specialize in helping businesses maximize their benefits offerings to meet evolving employee expectations. Our benefits administration services streamline health insurance, retirement plans, and other employee benefits to help businesses recruit and retain top talent.

    Partner with GMS to create a benefits package that meets today’s workforce expectations and positions your business as the ideal company to work for.

  • As we approach the end of the year, it’s a crucial time for Flexible Spending Account (FSA) holders to review their balances and ensure they’re maximizing these pre-tax dollars. While FSAs provide valuable tax benefits, they come with strict use-it-or-lose-it rules that can leave employees forfeiting funds if they don’t act before the year ends.

    Continue reading to learn what both employers and employees need to know about FSAs, critical deadlines, and strategies to avoid losing these hard-earned savings.

    Key Deadlines For FSAs

    Flexible Spending Accounts generally have a calendar-year plan, meaning that for many, December 31st is the last day to incur eligible expenses. According to the IRS, however, employers can offer one of these options that provide additional flexibility:

    1. Grace period: Allows employees an additional two-and-a-half months after year-end to use any remaining FSA funds.
    2. Carryover option: Permits employees to roll over up to $680 of unused funds (as of 2026) into the next plan year while forfeiting any remaining balance beyond this limit.

    Employers may offer one of these options but not both. It’s critical for employees to check with their HR departments to know which option, if any, applies to their account.

    What Employees Should Know

    Employees looking to make the most of their FSAs before the deadline should consider the following steps:

    • Review eligible expenses: FSAs cover a wide range of medical, dental, and vision expenses. Typical eligible expenses include prescription medications, copays, and medical equipment. Click here for an entire store of qualifying expenses, which can be helpful when planning year-end spending.
    • Schedule appointments and fill prescriptions: Many health care providers and pharmacies book up quickly toward the end of the year. Employees should consider scheduling any necessary medical, dental, or vision appointments as soon as possible.
    • Invest in health products: Many over-the-counter products, such as first-aid kits, blood pressure monitors, and even sunscreen, are FSA-eligible. Employees can use up their remaining funds on these items.
    • Track spending carefully: It’s essential to keep receipts and track spending, as some items may require documentation for reimbursement. Additionally, employees should confirm their remaining balance through their FSA provider to avoid overspending.

    Important Considerations For Employers

    Employers play a vital role in helping employees understand and maximize their FSA benefits. Here are some key points for employers to keep in mind:

    • Communicate deadlines: Employers should remind employees of year-end deadlines and, if there are grace periods or carryover options in place. Clear communication can help employees make informed spending decisions.
    • Encourage education on eligible expenses: Many employees may not be aware of the full range of FSA-eligible expenses. Employers can consider sharing resources or holding informational sessions to help employees make the most of their funds.
    • Evaluate FSA options for the next year: Offering a grace period or carryover option can provide employees with valuable flexibility and may encourage higher FSA participation rates. Employers should assess these options annually to determine which choice best aligns with their company’s goals and employee needs.

    How GMS Can Help

    FSAs are a valuable employee benefit, but managing them effectively requires clear communication and guidance. Group Management Services (GMS) assists businesses in structuring and managing their benefits packages, including FSAs, to optimize value for both employees and employers. From helping you select the best FSA options to educating your workforce about deadlines and eligible expenses, GMS provides comprehensive support to make year-end planning seamless.

    Don’t let your employees lose out on the benefits they deserve. Contact GMS today to maximize the impact of your company’s FSA offerings.

  • Setting up a 401(k) plan for your small business not only helps you stand out in the competitive job market but also offers tax credits, deductions, and retirement savings for business owners. With the passing of SECURE Act 2.0, small businesses can take advantage of even more tax incentives, making a 401(k) plan more lucrative.

    The following steps will help get you started on establishing a 401(k) for your employees.

    Why Offer A 401(k) Plan?

    Many business owners assume a 401(k) plan is too costly or complex, but the benefits can far outweigh the negatives. By offering a 401(k) plan you can:

    • Attract and retain top talent: A recent study found that after health insurance, retirement plans are tied with company leave as the second most sought-after benefit. This study also found that 401(k) plans can help reduce turnover rates and boost retention by 81%.
    • Access tax credits: Small businesses with 50 employees or less may qualify for up to $5,000 per year in startup tax credits for the first three years, and an additional $500 annually for automatic enrollment, adding up to a potential $16,500 in total savings.
    • Secure retirement savings: A 401(k) plan lets business owners contribute to their own retirement savings while offering tax-deductible contributions for their company.

    Step 1: Research Retirement Options

    If you don’t have a 401(k) set up for your business, begin by exploring providers. Look into reputable financial institutions that offer robust support, payroll integration, and easy administration. Seek feedback from other small business owners about their experiences and consider a provider that can serve you for the long term.

    Consider factors such as:

    • Cost: How much is the plan? Is there a monthly fee associated with managing the plan?
    • Investment options: What funds are available in the plan?
    • Advice and guidance: Is there advice or counsel offered for participants?
    • Customer support: Is there easy access to reliable support if technical questions arise?

    Step 2: Choose Your 401(k) Plan Type

    Once you have a provider, select one or more plan types that best fits your business and employees’ needs:

    A traditional 401(k) allows employees to make pre-tax contributions via payroll deductions. Employers can contribute on behalf of employees, offer matching contributions, or both, with these contributions potentially subject to a vesting schedule. This plan must meet nondiscrimination requirements through annual actual deferral percentage (ADP), actual contribution percentage (ACP), and top-heavy tests to ensure fairness to ensure fairness. to ensure fairness.

    A Roth 401(k) is similar to traditional plans but contributions are made with after-tax dollars. This means withdrawals from the account are tax free upon retirement.

    The safe harbor 401(k) also resembles traditional plans except this plan requires employers to make contributions that employees own right away. These contributions can either match what employees put in or be a set amount for everyone who qualifies. A safe harbor plan doesn’t have to pass the ADP or ACP tests if employers provide their employees with clear and timely information about how the plan works and what their rights are.

    Lastly, the SIMPLE 401(k) is designed for small businesses with 100 or fewer employees. It is not subject to annual nondiscrimination tests and requires fully vested employer contributions. However, employees cannot receive contributions under other plans of the employer. If an employer offers alternative retirement plans, an employee utilizing the SIMPLE 401(k) plan can’t maintain those options.

    Once you have your plan type(s) selected, you should then consider other factors such as automatic enrollment and matching contributions. Automatic enrollment self-enrolls employees in your company’s plan, increasing participation rates and potentially qualifying your business for extra tax credits. Matching contributions is when an employer matches an employee’s 401k contribution up to a certain percentage of the employee’s salary.

    Step 3: Create A 401(k) Plan Document

    Draft a plan document that meets IRS requirements and outlines the specifics of your retirement plan. This document will include the plan’s terms, contribution structure, and eligibility criteria. Work with your provider to ensure compliance with federal regulations.

    Step 4: Set Up A Trust To Hold Plan Assets

    All 401(k) plan assets must be held in a trust to protect participants’ interests. Appoint at least one trustee to manage contributions, investments, and distributions, ensuring the plan’s financial integrity.

    Step 5: Maintain Accurate Records

    Accurate record-keeping is essential for tracking contributions and plan values. Many small businesses work with a contract administrator or financial institution to simplify this process and ensure ongoing compliance.

    Step 6: Inform Your Employees

    Provide employees with a summary plan description (SPD) that explains the plan’s benefits, rights, and features. Keep employees updated on investments and any plan changes. Transparent communication helps employees make informed decisions about their retirement savings.

    Step 7: Monitor And Maintain The Plan

    Regularly review your 401(k) plan to ensure it continues to meet your business and employees’ needs. A reliable provider can assist with compliance checks, manage reporting requirements, and help maximize the plan’s value.

    Tax Benefits Of Setting Up A 401(k) Plan

    Establishing a 401(k) plan offers several tax advantages for your business including:

    • Startup tax credits: As mentioned above, small businesses with up to 50 employees may qualify for a tax credit covering 100% of startup costs, up to $5,000 per year for the first three years. Medium-sized businesses (51-100 employees) are eligible for a 50% credit on administrative costs, capped at $5,000 annually for three years.
    • Employer contribution credit: The SECURE Act 2.0 introduced a credit that allows small businesses to receive up to $1,000 per employee in employer contribution credits. This amount phases out gradually over five years, providing 100% credit in the first two years, 75% in the third year, 50% in the fourth year, and 25% in the fifth year.
    • Employer contribution deduction: Employers can deduct contributions up to 25% of eligible employees’ compensation, directly reducing federal tax liability.
    • Pre-tax deferrals for employees: Contributions reduce taxable income for the employer and employees, as pre-tax contributions defer taxes until funds are withdrawn, potentially lowering employees’ tax bills in retirement.

    Setting Up Your 401(k) With Ease

    Establishing a 401(k) plan may seem complex, but the right partner can make the process straightforward and manageable. A professional employer organization (PEO) like Group Management Services (GMS) simplifies 401(k) administration, offering expertise in plan selection, compliance, and ongoing management. Let GMS help you build a retirement plan that benefits your employees and strengthens your business.

    Ready to get started? Contact GMS today to explore how we can help you set up a 401(k) plan best suited for your business.

  • In today’s unpredictable U.S. health care landscape, businesses are struggling more than ever to provide competitive health benefits while controlling rising costs. Next year, U.S. employers project a 9% increase in health care plan costs – 2.6% higher than last year’s budget increases. Each employee covered by company health plans will cost $16,000 annually.

    Small and midsize businesses (SMBs) are finding it particularly daunting to offer competitive health care plans compared to their larger competitors. A single hospital claim can cost a company over $100,000. Employers struggling with these rising costs often look for assistance from external organizations specialized in fighting claims and managing benefits administration.

    Continue reading to discover key strategies that can help your business manage its health care costs and optimize employee benefits for the coming year.

    What Type Of Medical Insurance Does My Business Need?

    There are two primary types of medical insurance:

    Fully funded

    • This is the most common option, where insurance rates are set based on factors such as age, gender, and location.
    • While easy to manage, businesses have little insight into how their plan is performing – such as how well the plan controls costs, processes claims, and manages employee health care usage.

    Level funded

    • This option provides greater transparency, as it’s based on the health of the group, size of the company, and expected usage.
    • This gives SMBs a better understanding of their plan’s performance and predict renewal costs.
    • However, it can be more unpredictable, especially for smaller groups, because they’re tied to the group’s health and claims history. A single high-cost claim can cause unpredictable spikes in renewal premiums, making budgeting less stable compared to fixed premium plans.

    Given these options, businesses should ask critical questions when selecting a health insurance partner. SMBs need to consider factors beyond the deductible, such as copayments and the maximum out-of-pocket costs.

    Catastrophic Claims

    Catastrophic claims, where serious injuries result in permanently preventing an employee from working, now account for over 20% of cost increases. Without proper audits and cost-control initiatives, SMBs are at the mercy of health care providers.

    Measures that can have a positive impact on cost savings include:

    Case management

    • Health care professionals coordinate complex care for employees to ensure they receive appropriate treatment, helping avoid unnecessary services and reducing overall costs.

    Disease management

    • Employers can reduce expenses associated with emergency medical care by offering guidance and resources to support employees with chronic conditions.

    Nurse advice lines

    Claim audits

    • Reviewing medical bills ensures accuracy and helps catch errors or overcharges.

    Rising Cost Of GLP-1 Drugs

    A major driver behind the increase in prescription drug costs is the rising demand in Glucagon-Like Peptide-1 (GLP-1) drugs, such as Ozempic, Wegovy, and Trulicity. Commonly prescribed to treat diabetes and obesity, GLP-1 drugs are responsible for over 75% of the increase in costs. These medications, ranging from $1,000 to $1,500 per month, can quickly strain an employer’s budget.

    Providing employees access to more affordable services like telehealth, coaching, or gym membership reimbursements also allows you to support their healthy lifestyle change without breaking the bank.

    Medical Provider Costs

    “Your worst-case scenario is what you need to plan for,” -GMS’ Benefits Sales Manager, Claire McCarus

    To combat these rising costs, SMBs should design a plan that includes:

    Dependent eligibility audits

    • A process that reviews and verifies that all dependents enrolled in a company’s health plan meet eligibility requirements.

    High deductible health plans (HDHP)

    • Insurance plans that offer lower premiums but require employees to meet higher deductibles, meaning they must pay more out-of-pocket costs before full coverage begins.

    Spousal surcharges

    • Additional fees are charged when an employee’s spouse has access to their own employer-sponsored health insurance but chooses to remain under the employee’s plan.

    Formulary changes

    • Adjustments to the list of prescription drugs covered by a health plan, aimed at promoting cost-effective medications and managing rising drug expenses.

    At Group Management Services (GMS), we offer highly competitive health care plans that help business owners effectively manage rising health care costs. On average, our plans are 26% lower for individuals and 15% lower for families compared to the U.S. market.

    What About Ancillary Benefits?

    Ancillary benefits, such as dental, vision, life insurance, and disability, are an affordable way to enhance your benefits package without the high cost of medical insurance. Offering these supplementary benefits can also boost employee satisfaction and retention at a lower cost.

    Partner With GMS

    Managing your company’s health care plan is stressful and expensive, especially for smaller businesses. As health care costs continue to increase, you’ll want to start looking for ways to cut down on claims and prescription drugs and reorganize suitable medical plans for your business.

    If all of this sounds daunting – don’t worry. There are companies with the sole purpose of helping you manage the backend complexities that come with running a business. Outsourcing to a partner like GMS can simplify the administrative burden, providing a dedicated team to handle employee inquiries, manage claims, and even oversee the Consolidated Omnibus Budget Reconciliation Act (COBRA) administration.

    This support helps ensure nothing falls through the cracks, enabling employers to focus on their business rather than the complexities of benefits administration. Contact us here so we can help your business reduce avoidable expenses and alleviate the stress associated with managing employee benefits.

  • In 2025, more than 72.5 million Americans will see a change in their Social Security and Supplemental Security Income (SSI) benefits due to a 2.5% cost-of-living adjustment (COLA). This change, announced by the Social Security Administration (SSA), aims to help retirees and SSI recipients to keep pace with rising costs. While the adjustment isn’t as significant as the 3.2% increase in 2024, it is still a crucial step toward maintaining the financial stability of millions of Americans, especially in a fluctuating economy.

    What Does The 2025 COLA Mean For Social Security Beneficiaries?

    For Social Security beneficiaries, the 2.5% COLA will result in an average monthly benefit increase of about $50, starting in January 2025. Meanwhile, SSI recipients will begin receiving increased payments on December 31, 2024. This boost is part of the SSA’s annual adjustment process, which ties COLA to the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W), ensuring benefits adjust with inflation.

    In addition to the benefit increase, the taxable maximum (the maximum amount of earnings subject to Social Security tax) will rise from $168,600 to $176,100. This means higher-income earners will contribute more to Social Security in 2025.

    The earnings limit for individuals who have not yet reached full retirement age will increase, allowing them to earn up to $23,400 before benefits are reduced. For those reaching full retirement age in 2025, the limit rises to $62,160. There are no earning limits for individuals at or above full retirement age, which provides greater flexibility for those continuing to work.

    Simplified Communication For Beneficiaries

    One key improvement in 2025 is the SSA’s redesign of the COLA notice. Beneficiaries will now receive a simplified, one-page document with personalized information about their benefit changes, making it easier to understand their new payment amounts and any applicable deductions. Beneficiaries with a “My Social Security” account can access this information online before receiving the mailed notice, providing quicker access to critical updates.

    These changes reflect the SSA’s ongoing effort to streamline communication and improve the user experience, making it easier for beneficiaries to manage their benefits.

    What Employers Need to Know

    For businesses, particularly those managing payroll for employees receiving Social Security benefits, these changes require adjustments in payroll processes. The increase in the taxable maximum and changes to the earnings limits will impact payroll deductions and reporting requirements. Employers must stay informed about these changes to avoid compliance issues and ensure that deductions and withholdings are handled correctly.

    Additionally, businesses should be aware that employees who are nearing full retirement age may adjust their working hours or earnings to avoid benefit reductions, affecting workforce planning and productivity. Employers who offer benefits that coordinate with Social Security, such as pension plans or retirement savings programs, may also need to update their offerings to align with the new COLA.

    Partner With GMS

    In a financial landscape that is constantly changing, businesses need a strategic partner to help navigate the complexities of payroll management, tax compliance, and regulatory changes like the Social Security COLA. As a professional employer organization (PEO), GMS provides the expertise and support needed to optimize payroll processes and ensure compliance with these updates. By partnering with GMS, businesses can focus on their core operations while we manage the administrative burdens, ensuring that both employers and employees benefit from financial stability.

    Let GMS be your trusted partner in staying compliant and navigating the ever-changing world of payroll and benefits. Contact us today to learn more about how we can support your business through 2025 and beyond.

  • Many working parents in California need time off to manage school-related activities or care for their sick children throughout the year. For employers, understanding the state’s leave entitlements is critical to maintaining compliance while supporting employees’ work-life balance. Continue reading for an overview of key California leave laws for parents and caregivers that businesses should consider.

    Supporting Involvement In Education

    The Family-School Partnership Act requires employers with 25 or more employees at a single location to provide eligible employees with up to 40 hours of unpaid leave each year to participate in their children’s school activities. Eligible employees include parents, guardians, and grandparents who have custody of children in grades K-12 or those attending licensed daycare facilities.

    This leave can be used for activities such as school meetings, field trips, or parent-teacher conferences. However, it is important for employers to note that this leave is capped at eight hours per month, and employees may be required to use accrued vacation or paid time off (PTO) before taking unpaid leave. Additionally, employers can request that employees provide reasonable advance notice when taking leave for school-related activities.

    Protecting Parent Involvement

    Under California Labor Code Section 230.7, employers are prohibited from discriminating against or terminating employees who need time off to attend school meetings related to their child’s suspension or expulsion. In these situations, parents and guardians have a right to be present under California Education Code Section 48900.1. Employers must ensure their policies do not penalize employees for fulfilling their responsibilities as parents in these difficult circumstances.

    Caring For Sick Children

    When cold and flu season hits, parents often need time off to care for their sick children. California’s Paid Sick Leave law allows employees to use their accrued sick time for their own health needs or to care for a sick family member, including children. This can include time off for preventive care, diagnosis, or treatment.

    As of January 1, 2024, the minimum mandated paid sick leave increased to five days or 40 hours per year. Employers should ensure they are meeting this requirement and be mindful of any additional local sick leave ordinances that may apply. Many cities and counties in California have their own sick leave laws that may be more generous than the state standard.

    Best Practices For Employers

    To create a supportive and compliant workplace, it’s important for employers to:

    1. Review and update leave policies: Ensure that leave policies comply with state and local laws, including updates to the minimum paid sick leave.
    2. Communicate clearly with employees: Make sure employees are aware of their rights and the procedures for requesting leave. Consider updating employee handbooks to reflect any changes in the law.
    3. Monitor local ordinances: In addition to state laws, California has many local ordinances that may require additional leave or benefits. Keeping track of these changes is essential for maintaining compliance.

    How GMS Can Help

    Navigating California’s complex employment laws, especially as they relate to family and medical leave, can be challenging. GMS helps businesses stay compliant by offering comprehensive HR services that keep you informed of regulatory changes and ensure your policies meet legal requirements. Whether it’s managing leave entitlements, sick leave policies, or other employment law compliance, GMS is here to guide your business through the intricacies of California labor laws, reducing risk, and helping you focus on your business’s success. Let us take care of the details so you can stay compliant and provide a supportive environment for your employees.

  • 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.