Deer Valley Homebuilders was founded in January 2004 by eight gentlemen with over 125 years of industry experience, including General Management, Production, Sales, Customer Service, and Finance. The management team will operate to the highest standard of business, moral ethics, and will approach business with an open mind through communication, positive attitude, and teamwork. Deer Valley Homes has about 430 employees, which build quality homes. Deer Valley Homes focus on manufactured mobile homes and has a small number of modular homes. These homes appear to be manufactured mobile homes that are triple wide and bigger. They have limited architectural options but are a better choice than standard manufactured homes. (Deer Valley Corp, n.d., p. 1)
For many corporations and companies, it is standard practice to offer highly discounted access to medical and dental insurance to its full-time employees. Typically, these companies pay a large portion of their employees’ health insurance bills. The employees forfeit a certain fraction of their pay toward the rest of the benefits. The amount they pay is nominal in comparison to the average price of a full health insurance package to a typical citizen.
Currently, Deer Valley Homes does not offer a 401K program. A traditional 401(k) plan offers the maximum flexibility of the three types of plans. Employers have the discretion to make contributions on behalf of all participants, to match employees’ deferrals, or do both. These contributions can be subject to a vesting schedule (which provides that an employee’s right to employer contributions becomes non- forfeitable only after a period of time). In addition, a traditional 401(k) allows participants to make pre-tax contributions through payroll deductions. Annual testing ensures that benefits for rank and file employees are proportional to benefits for owners/managers.
fA SIMPLE 401(k) plan was created so those small businesses could have an effective cost-efficient way to offer retirement benefits to their employees. A SIMPLE 401(k) plan is not subject to the annual nondiscrimination tests that apply to the traditional plans. Similar to a safe harbor 401(k) plan, the employer is required to make employer contributions that are fully vested. This type of 401(k) plan is available to employers with 100 or fewer employees who received at least $5000 in compensation from the employer for the preceding calendar year. In addition, employees that are covered by a SIMPLE 401(k) plan may not receive any contributions or benefit accruals under any other plans of the employer.
Savings Incentive Plan for Employees (SIMPLE plans)
There are two types of SIMPLE plans: SIMPLE IRAs and SIMPLE 401(k)s. Both are simplified retirement plans designed for small employers with 100 or fewer employees. Each plan allows for voluntary employee pre-tax deferrals equal the lesser of 100% of compensation or the maximum deferral limit. The maximum limit is:
Year SIMPLE Elective Limit Age 50+ Catch-up
2009 $9,000 $1,500
2010 $10,000 $2,000
2011 on $10,000 $2,500
The employer is required to make a contribution to the plan. The employer may choose from the following contribution options: A non-elective (basic) contribution of at least 2% of compensation for all eligible employees earning at least $5,000; OR at least 100% matching contribution up to the first 3% compensation. With SIMPLE IRA plans only, the employer has the option to reduce the matching contribution as low as 1% for no more than two out of five years ending with the current year. The option to reduce the matching contribution below 3% is not available with SIMPLE 401(k) plans.
Withdrawal amounts form a SIMPLE IRA during the first two years of participation would generally be subject to a 25% penalty tax; the normal 10% penalty applies afterward. The employee must always be 100% vested in both employee deferrals and employer contributions.
To offer a SIMPLE plan, employers must satisfy two requirements:
1. During the previous year, the employer had 100 or fewer employees who earned at least $5,000, and
2. The employer does not sponsor any other retirement plan
Although employers can open plans up to more employees, the minimum requirement is that employees are eligible if they earned at least $5,000 from the employer during the previous two years and it is reasonable to expect that they will earn at least $5,000 during the current year. (Simple 401K, 2006, p. 1)
Once you have decided on the type of plan for your company, you will have flexibility in choosing some of the plan’s features — such as which employees can contribute to the plan and how much. Other features written into the plan are required by law. For instance, the plan document must describe how certain key functions are carried out, such as how contributions are deposited in the plan. (Employee Benefits, n.d., p. 1)
Ritz-Craft has always been a family-owned business. Their employment focus is aimed towards providing consistent employment at competitive wages and salaries for all employees. Ritz-Craft offers a complete benefits package that includes health insurance, a dental plan, paid vacations and a 401(k) plan that is available to all employees.
Employment at Ritz-Craft is very much entry into a family. In fact, the average Ritz-Craft employee has more than 10 years experience with the company.
Ritz-Craft 401k profit sharing plan is a Defined Contribution Plan which has an account specified for the individual employee where a defined amount is being contributed to the plan by the individual, the employer or both. Examples of this type of plan are 401(k), 401(a), Employee Stock Ownership Plan (ESOP), Savings Plans and Profit Sharing Plans. (Ritz-Craft Corporation, n.d., p. 1)
Based in Dallas, Texas, Palm Harbor Homes is one of the nation’s largest marketers of factory-built homes. The company’s vertically integrated operations set it apart from others in the industry. Palm Harbor builds, sells, finances and ensures the best-manufactured homes available today.
Palm Harbor’s focus is the high-end, customized niche of the manufactured home market. Four out of five homes produced in its 18 manufacturing facilities across the country are customized with owner-selected features. Palm Harbor sells its homes through 115 company-owned superstores and more than 350 independent retailers. (Plant City Manufactured Mobile Homes, n.d., p. 1)
Palm Harbor has two primary goals satisfying their customers and making their company the best job their associates have ever had. Palm Harbor’s Employee Benefits Package includes: Medical – PPO program includes a minimal co-pay, prescription card and well-care benefits. Palm Harbor pays for the majority of the cost. Dental – the dental plan covers, among many other comprehensive dental benefits, $2,000 of orthodontic services for adults and children. Vision – the vision plan covers traditional services as well as some laser vision correction services. Disability Protection – Short and/or long-term disability coverage is available to associates after three months of service. Life Insurance – life insurance includes accidental death and dismemberment and is provided to all associates at no cost. Additional life insurance for spouses and children is offered at nominal rates. 401K Savings Plan – All employees are eligible to contribute to the 401(k) Plan upon their date of hire. In addition, after one year of service, Palm Harbor will match employee contributions in the amount of 25% for every $1.00 contributed up to 6%. The Plan offers over 28 different investment options to choose from with options available in every major fund style category, including company stock. Rollovers are also accepted from other company plans. Stock Purchase Plan – employees can be a shareholder immediately. Associates may buy Palm Harbor stock via payroll deductions in the stock purchase plan. Palm Harbor pays for the administration of the plan and the participants share commission costs. Holidays – the company observes eight holidays per year for most associates. Some locations may observe an additional holiday for local customs. Vacation Time and Personal Time Off – Salaried associates with five years or less of service enjoy ten vacation days per year. Those with six years or more of service enjoy fifteen vacation days per year. In addition to our holiday and vacation package, our company offers one personal day to all associates with one year of service with Palm Harbor and two personal days after three years. Sick Leave – Salaried associates accrue sick leave credits each month with a maximum earned of 45 days. Employee Assistance Programs – PHH has contracted with Ceridian to provide all associates with a wide range of services, including: counseling for any work or life situation (counseling provided via the phone and/or in person,) along with college counseling, auto and home services, long term care solutions, debt and legal counseling, books, tapes, videos and much more. There is no cost to the associates and the counselors are available 24/7.A NurseLine is also provided for assistance with emergencies and for guidance with other medical situations. (Plant City Manufactured Mobile Homes, n.d., p. 1)
The current impediment would be lack of a great benefits package, which would include a quality 401k plan. One impediment is the affordability to Deer Valley and the employees. Another impediment is finding the right company to provide all sought benefits in one place.
Recommendations for Deer Valley Homes:
Health Insurance – Insurance premiums will probably cost you about 8% to 10% of your payroll amount. The majority of this will be your health insurance premiums. So what are your options and how do you find the best deal? There are currently three main types of health coverage you can offer to your employees: traditional coverage (fee-for-service), HMO (health maintenance organization), or PPO (preferred provider organization). I would recommend a traditional health coverage plan; your employees will have the most flexibility. It pays to find a good broker when looking for health insurance policies. The broker may represent plans from up to 15 different insurers, allowing you to get a better feel for what is available and do more comparison shopping. Make sure there is a good range of services offered and that long-term illnesses and pre-existing conditions are covered. There should also be at least $1 million in coverage.
Long and Short-Term Disability – short-term disability (STD) provides employee’s income on a short-term basis as a result of a disability, and is usually equal to about 60% of the employee’s gross weekly pay up to 26 weeks. Long-term disability is lost-income coverage that kicks in as a result of a disability. It is also based on about 60% of the employee’s gross income. There is usually an elimination period of 30 to 180 days before the benefits will begin, so it typically picks up where short-term disability ends. LTD benefits can continue on for life, although most terminate at age 65 when social security kicks in. Many employers pay all of the long-term disability premiums. Some companies pay for short-term disability and make the long-term optional, at a reduced cost to the employee. The logic behind this is that you want the employee to come back to work after a short, unforeseen accident or injury — employers rarely see an employee come back from long-term disability. If the company pays for the benefit, it is considered taxable income; if the employee pays for the benefit, it is considered insurance and is non-taxable. The life insurance plan currently offered is a good policy and the cost is minimal so I would recommend keeping your current provider. Deer Valley is lacking and needs a quality 401K plan; 401(k) plans let your employees save for retirement easily and conveniently through pre-tax automatic payroll deductions. Its money they don’t see, so they don’t miss it.
Implementing a 401(k) plan can improve employee morale and help in luring in new employees. The money your employees contribute, as well as your contributions and their account earnings, are all tax-deferred until they actually withdraw the money when they retire. Employees have full control over their investments. Withdrawals are also permitted at the termination of employment or during financial hardship, but a 10% penalty tax is charged if they are younger than 59 1/2 years old. Many companies allow terminated employees or employees who elect to leave the company the option to keep their 401(k) account, but they can no longer contribute to it. As an employer, you are not required to match contributions or contribute at all to your company’s 401(k) plan; however, to be competitive, most employers do. You do have the flexibility to alter your contributions year to year based on the profitability of your company. You even have the option of contributing on behalf of employees who aren’t participating as long as they are eligible. Your contributions are tax deductible. You can also set up a vesting schedule for the contributions you make to your employees’ accounts. This is just another way to help motivate employees to stay with the company longer. (Obringer, 2003, p. 1)
The best way to obtain good employees and retain them is to offer better compensation and benefits. Deer Valley has a poor compensation and benefits package. Being a small business does not have to limit your benefits. There are several different approaches Deer Valley can take, decide on a great benefits package and keep it in-house or outsource the compensation and benefits to another company that handles these areas. I would recommend with the current staff to handle your compensation and benefits in-house. Now you just have to decide which benefits best serve Deer Valleys needs at present and the future. Not having a good benefits package is hurting your desire to obtain and retain good employees. By offering and providing your current employees at Deer Valley with good quality compensation and benefits it will help boost morale. When offering a quality compensation and benefits package we will be able to attract and retain well-trained employees more so than other local manufacturing companies in your area. With the best employees in the business, your facility will be more productive, you will have a better-built product and must higher efficiency rate.
Deer Valley Corp (n.d.). About Deer Valley. Retrieved November 3, 2008, from www.deervalleycorp.com/
Employee Benefits (n.d.). 401(k) Plans For Small Businesses. Retrieved November 05, 2008, from www.business.gov/guides/employment/managing/benefits/
Obringer, L. A. (2003). How Employee Compensation Works. Retrieved December 8, 2008, from Howstuffworks.com
Plant City Manufactured Mobile Homes (n.d.). Our Benefits. Retrieved December 2, 2008, from www.palmharbor.com
Plant City Manufactured Mobile Homes (n.d.). Palm Harbor Village. Retrieved November 30, 2008, from www.palmharbor.com
Ritz-Craft Corporation (n.d.). Company History. Retrieved November 26, 2008, from www.ritz-craft.com
Simple 401K (2006). Simple 401k Plans. Retrieved November 28, 2008, from www.simple401k.com