Contractors: Your Prevailing Wage Document
As a contractor bidding on government work you pay attention to every detail. You bid your job to insure you can accomplish the task with your set profit margin, you leave nothing to chance. Why then do so many contractors take a chance that their "Bona Fide Benefit Plan" doesn't meet the minimum appropriate written standards? If you are one of the hundreds of thousands of contractors using a qualified retirement plan as a bona fide benefit plan you need to pay attention to the details.
Taking the fringe off the payroll and contributing it to a qualified retirement plan is a win/win. Although employees may not currently see the benefit, the fact still stands that Americans are sorely lacking in retirement savings.
More people know how to change a flat tire than have a plan for their retirement.
Taking the fringe off the payroll and contributing it to your qualified retirement plan helps you lower your labor cost and increases the odds your employees will have retirement savings.
If your plan document does not accurately and fully address, in writing, prevailing wage terms and conditions your efforts may be met by regulatory sanctions which come with fines, penalties, and plan disqualification.
How do you know if your plan accurately addresses *all* the provisions necessary to insure qualification as a bona fide benefit plan? Take a moment, open a copy of your document, use the search function (Ctrl+F for PDF, Word documents or Apple+F for Mac) and search for the word prevailing. How many times does the word appear and where in your document is it located? At a minimum, you should see mention of the prevailing wage in the definition, eligibility, vesting, allocation, and distribution sections of your plan document. Your document should call out which types of contributions will be offset with prevailing wage contributions, who will be eligible for such contributions, and reference the hourly rate, percentage, or dollar of contribution amount in the document or as an addendum to the document.
All plan documents are not created equal. Some documents are designed with the government contractor in mind not as an afterthought. Make sure your document addresses the prevailing wage fringe contributions fully, don't leave it to chance.
Scott Ann Setzer, Senior Pension Consultant
Polycomp Administrative Services, Inc.