S All asset categories end 2003 with positive returns - American ...

FEBRUARY 2004
Small employers cite revenue uncertainty and costs
as impediments to sponsoring a retirement plan
R
revenue uncertainty is the
top reason small employers (those
with five to 100 full-time employees)
do not sponsor a retirement
plan, according to the 2003 Small
Employer Retirement Survey
(SERS) sponsored by the Employee
Benefit Research Institute (EBRI),
the American Savings Education
Council (ASEC), and Mathew Greenwald
& Associates.
Perhaps there is a link in uncertain revenue
and the offering of other benefits
as well. Of small employers who do not
offer a retirement plan, those who also
did not offer health insurance were more
likely to say uncertain revenue keeps
them from sponsoring a retirement plan
(37.8% compared to 22.1% of small employers
who did offer health insurance).
Just for FUN
Update
Employee Benefi t News for Members of AAPG
page 6
Other demographics also came into play
whether or not employers blamed unstable
revenues for not offering a retirement
plan. Citing revenue uncertainty
decreased as gross revenue of the business
increased (18% for employers with over
$2 million in revenue versus 40.4% for
employers with $500,000-$750,000 in
revenue) and as average salary of most
full-time employees increased (19.9%
for employers where most full-time employees
made over $40,000 compared
to $27.3% for employers where most
full-timers made between $20,000 and
$30,000).
It is no surprise, then, that 58% of those
who were very or somewhat likely to start
a retirement plan in the next two years
said it would be much more likely they
would start a plan if they experienced
an increase in business profits. Over twothirds
of those employers who originally
said they were not too likely or not at
Each number in the phrase below represents a different letter of the alphabet. Not all letters of the alphabet
are used. To get you started, the number “10” represents the letter “V.” The solution is on page 4.
~ John Welch
all likely to start a plan in the next two
years also said an increase in business
profits would make them much more
likely (22.8%) or somewhat more likely
(44.3%) they would install a retirement
plan.
The second most cited reason for not
offering a plan was the administrative
and set-up costs for a plan. Interestingly,
those who were not aware of the
tax credits established by the Economic
Growth Tax Relief and Reconciliation
Act (EGTRRA) of 2001 were more likely
to say costs were an impediment to their
sponsoring a plan than those who were
aware of the EGTRRA tax credits. Small
employers who do not currently sponsor
a retirement plan should note they
are allowed a tax credit for 50% of the
first $1,000 of administrative expenses
incurred within each of the first three
plan years after implementing a qualified
retirement plan. Therefore, there is
a maximum credit of
$500 a year for three
years. To be eligible, an
employer must not have
had, in the preceding
year, more than 100 employees.
The plan must
be established after 2001
and must cover at least
one non-highly compensated
employee. In addition,
the employer must
not have sponsored a
qualified retirement plan
during the three years
immediately prior to the
credit being available.
Source: 2003 Small Employer
Retirement Survey, EBRI Notes,
September 2003.