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More to Know About Your 401(k)

In January's issue of Business Credit, Financial Advisor George Van Dyke noted that if you are a highly compensated employee or own a part of a company, your ability to participate in a 401(k) plan may be limited by the participation of other employees.

He had this additional information to add to employees whose compensation exceeds $85,000 and/or has more than five percent ownership of a company, "A Highly Compensated Employee earning $100,000 per year could, depending on the average deferral percentage of the Non-Highly Compensated Employees, hypothetically be restricted to a salary deferral of up to 6 percent.Thus, the individual would only be able to contribute up to $6,000 per year to the 401(k).This restriction denies the person from making the maximum allowable contribution and, if there is a company match on contributions above 6 percent, prevents the individual from receiving additional company contributions. Some companies may offer additional deferred compensation plans to Highly Compensated Employees to compensate for the possible restrictions of a 401(k) plan."

Van Dyke adds that Highly Compensated Employees who earn substantially more than the $85,000 limit might find that the salary deferral restrictions they face actually do not diminish their saving capabilities quite as much. For example, an individual earning $145,000/year, faced with the same 6 percent deferral limitation, can actually contribute up to $8,700 to the 401(k) plan.

Whatever your status within your company, if a 401(k) is offered, you should consider participation to the best of your ability.Van Dyke notes that if you do not plan for your own future, you may not achieve the future you envision.

Governor Signs California Bill Requiring Licensing of Electricians AB 931

In an effort to raise safety standards in the electrical industry; Governor Gray Davis signed Assembly Bill 931 (AB 931), requiring all electricians in the state of California to be licensed.

"It's about safety and the public interest," said Peter Marana, executive director of the National Electrical Contractors Association (NECA), Northern California. "Let's face it-electricity is dangerous. Currently, anyone can put on a tool belt and call himself or herself an electrician. AB 931 helps protect the public by halting this unsafe practice;' said Marana.

Because of the clear danger to both workers and consumers, the National Fire Protection Association recommends licensing electricians to help eliminate electrical fires. Over a five-year period in California, 19,000 fires were caused by structural electrical problems that accounted for 908 injuries, 31 deaths and property damage of almost $270 million.

Under current state law, individual electricians do not have to be licensed to perform electrical work, unlike many other professions, such as manicurists, beauticians, locksmiths and even mortuary workers, who need to be licensed to practice in California. Following the lead of more than 30 other states which require licensing of electricians,AB 931 will enable the Contractor's State License Board under the Department of Apprenticeship Standards to establish and validate minimum standards for safe installation of electrical systems by electricians.

"When you think about it, electricians affect our lives and safety at work and in our homes and schools. It's important to set standards that ensure electrical work being done is performed as safely as possible," said Marana. His electrical contractors association joined with the International Brotherhood of Electrical Workers (IBEW) to support the bill and have worked to ensure its passage.

According to the bill's author, Assemblyman Tom Calderon, the rationale for the new law is simple: "If they (electrical workers) can't meet the standards, they shouldn't be doing the work '" Prior to reaching the Governor's desk, his bill (AB 931) passed by an overwhelming majority in both houses of the state legislature (52-23 in the Assembly and 24-11 in the Senate), with support from members of both parties. …

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