Our “bona fide” options can be implemented separately or in combination.
Our “Accounting Integration” service makes sure the cost savings we project are always realized.
"John Sedberry and Kimberley Tobin, CPWIS Principals, showed us how to implement a program that was a huge savings to our company and allowed our officers to maximize our retirement plan contributions.”"
Colleen Wathen
SC Valley Engineering, Inc.
Contractors Prevailing Wage
Insurance Services
1620 Alpine Blvd., Suite #208 Alpine, California 91901
800-935-0041
619-445-3472 fax E-mail Us
Prevailing Wage Pension Plans
In our world of descriptive phrases, a retirement plan or a pension plan, as it is sometimes called, is a “money later” plan. What we are trying to convey with these terminologies is that these monies will not actually be received by an employee until many years from now, hence the term “money later” plan.
Hourly contributions are made for each prevailing wage hour a field employee works. The distinction of accounting for deposits on an hourly basis is one of the ways a prevailing wage pension plan departs from normal 401(k) style pension plans. In the usual 401(k) environment, contributions are made on a percentage of earnings basis. Prevailing wage contributions are made as hourly amounts, as they are derived from the fringe portion of the prevailing wage, which is itself an hourly figure.
Contributions are made, normally, on a monthly basis and are deposited with a third party trustee. These funds are 100% vested from the time deposits are made to an employee’s account. There is no further service requirement which an employee must fulfill to be eligible to receive these funds.
Each field employee is able to make his or her own investment choices from within a menu of fund options provided by our pension administrator.
We generally recommend a delayed eligibility for participating in the pension plan, so as to NOT make contributions for temporary or short term employees.
Temporary and short term employee’s fringe monies can be deposited, usually, into our Supplemental Unemployment Benefit plan, until such time as eligibility for the pension plan is met.
There are at least four distinct design options available in our prevailing wage pension plan:
The first plan option is designed to receive monies for prevailing wage contributions from the fringe portion of the prevailing wage.
Employee elective deferrals are a second option and are sometimes desirable for employees who have other sources of income; such as from a working spouse and they wish to make contributions over and above the prevailing wage fringe contributions. Elective deferrals are also available for owners who wish to defer a portion of their earnings into a retirement plan.
Profit Sharing contributions are yet another design option which usually comes into play after an employer has made the maximum elective deferral contributions possible and wishes to deposit still more of his own money for his own retirement purposes.
The final design category we use frequently is called “Safe Harbor” employer contributions. This feature is commonly employed by an employer making maximum elective deferrals for himself and wants to be guaranteed that his contributions will pass required testing.
An owner is considered a highly compensated employee (HCE). When a HCE participates in a plan, the plan must be tested annually for discrimination in accordance with IRS requirements.
Prevailing wage contributions are considered “bona-fide” and are thus eligible for credit to be taken on certified payroll reports. Contributions are made and credits are taken on an hourly basis. An employer is NOT required to contribute for non-prevailing wage hours (private work). This is an important prevailing wage plan distinction, as other retirement plans require percentage contributions for all hours worked.
Lastly, one of the design features we frequently utilize is the ability to amend the plan as an owner’s goals and requirements change, thus making the retirement plan incredibly flexible in order to accommodate an owner’s business needs.
