Yesterday, President Obama signed into law key portions of the health care reform package. But what will this extensive new legislation mean to small businesses? As reported in The Richmond Times-Dispatch, business owners so far have mixed reactions:

Small-business owner Katrina VanHuss said she will need her accountant to help her understand the impact of health-care reform on her business. Her gut reaction yesterday to the landmark legislation was mixed. …

Five of her 14 employees are covered by the company’s plan. The total costs last year for seven employees, before she laid off about a third of her employees, was about $30,000, she said.

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Retirement savings has become a key issue when trying to recruit talent. The deflation of many 401(k)s has left many employees wanting to make sure they are covered. CNN Money.com reports on one unusual plan, cash balance pensions, that has captured the attention of many small business owners.

The plans, which involve mandatory annual contributions, work best for small business owners with fewer than 20 employees and excess profits of more than $50,000 per year that they can afford to sink into funding a pension , says Richard Jensen, president of BRS Consulting in Little Rock, Ark. If your company fits the bill, you can enjoy these benefits:

 

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The IRS recently released new Roth IRA conversion rules that provide any person, regardless of income level, with the opportunity to convert their individual IRAs to Roth IRAs in 2010. This conversion may be done by recognizing the entire Roth account value in 2010 or by dividing the income between the 2011 and 2012 tax years. For years after 2010, the Roth conversions will be allowed but will not have the two-year recognition opportunity for 2011 and 2012.

The rules also govern eligible rollover distributions from qualified employer retirement plans to Roth IRAs. An IRS notice (IRB 2009-39) outlines the specific requirements for the conversions and eligible rollovers from employer plans, such as pensions, profit sharing, and 401(k)s to Roth IRAs. The terms are summarized as follows:

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An IPO has become a far less viable option for business funding during the economic recovery. The Wall Street Journal reports on a funding method, the Employee Stock-Ownership Plan (ESOP), that is making a return to popularity among business owners.

An ESOP is highly regulated by the Employee Retirement Income Security Act, involving several entanglements for corporate liability. If you are considering an ESOP, we highly recommend consulting your Compensation and Benefits professional.

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Investor confidence has been thoroughly shaken in the past year, but an ING Institute for Retirement Research survey has found that employee-sponsored defined contribution plans have seen steady and continued support since the Fall of 2008. 84 percent said their employer’s plan was a “very important” part of their retirement strategy, while nearly all (92 percent) said the best way to contribute to these plans is through direct deductions from their paycheck.

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Every year, the IRS issues new limits for the following year that apply to retirement plan contributions. On October 15th, they announced the cost of living adjustments for 2010 that apply to all the various plans, and for the first time in memory there were virtually no changes from 2009. This also will apply to recipients of Social Security benefits. Below is a brief list of the 2010 limits, noting whether or not there will be an increase applied:

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The beginning of a new school year and the return of cold and flu season have again raised concerns over H1N1 influenza (aka, “swine flu”). In order to control the impact of the illness on the workplace, many small business owners are acting to raise awareness and prepare for potential employee absences. As reported in The Wall Street Journal:

Even if owners don’t already have staffers staying home because they or their children are sick, they need to figure out how the work will get done despite the flu. Owners should also think about prevention, whether that means making it easy for workers to get flu shots or keeping the workplace more sanitary. And they also need to be sure they keep employees’ health matters private even if co-workers want to know who’s got the flu.

 

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Last month, the IRS issued guidance, in the form of proposed regulations, that would allow an employer suffering from “a substantial business hardship” to suspend its 3% safe harbor non-elective contributions to its 401(k) or 403(b) plan during a plan year, provided that the employer timely amends the plan and satisfies a number of other conditions.

Previously, an employer who had installed safe harbor provisions in their 401(k) plan, could only stop the required, fully-vested safe harbor contribution if the safe harbor was a “safe harbor match” allocation and at least a 30-day notice was provided to employees. Employers were also required to timely amend their plan document, make the safe harbor match contribution through the date of the safe harbor termination, and participate in non-discrimination testing of deferrals and match for that plan year using the “current year” testing method.

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