New Update: Healthcare Costs Increasing by Over 60% in Some States. Will you be impacted?

The ABCs of 401(h) Plans For Nordson Employees

Healthcare Provider Update: Nordson offers a comprehensive benefits package to its U.S. employees, including medical, dental, vision, and prescription coverage. The company supports employee wellness through HSAs, FSAs, and a wellbeing program. Retirement benefits include both traditional and Roth 401(k) options, life insurance, and disability coverage. Nordson also provides paid time off, adoption reimbursement, and tuition assistance5. Healthcare costs in the United States are projected to continue rising through 2026, with insurers proposing significant premium increases for Affordable Care Act (ACA) plans. A recent analysis found that ACA insurers are seeking a median premium increase of 15% for 2026, marking the largest hike since 2018. This surge is attributed to factors such as the anticipated expiration of enhanced premium tax credits, rising medical costsincluding expensive medications and increased hospital staysand a shift in the risk pool towards higher-cost enrollees. Without the renewal of enhanced subsidies, out-of-pocket premiums for ACA marketplace enrollees could increase by more than 75% on average. Click here to learn more

'Employees of Nordson companies who are about to retire should understand the benefits of 401(h) plans as it is a good way to reduce the tax liability and to secure the medical costs for themselves and their families thus ensuring a better approach to the healthcare in retirement.'

It is important for Nordson retirees to understand the structure of 401(h) plans because the moneys that can be contributed and the time that can be saved on medical expenses will help to decrease the impact of the increasing healthcare costs and will help to establish a solid financial situation for the retirees and their families.'

In this article we will discuss:

1. The effects of the rising medical costs on health insurance premiums in 2023.
2. Basic information about 401(h) eligible retiree medical benefit accounts for Nordson companies' employees.
3. The pros and cons of using 401(h) plans for healthcare and retirement purposes.

The average increase in premium that health insurance plans have requested for 2023 is 10%; some plans have asked for an increase of between 5 and 14 percent. However, this year, 72 providers submitted their plans, and only four of them show a reduction in the prices. This is because the cost of health care is rising.

In their submissions for 2023, many insurers expect that the cost of health care will rise by 4 – 8 percent. The behavior of the costs reflects the prices that the plans pay for hospitals, doctors, and drug makers because of the inflation and the prices that the plans expect the patients to incur in the following year. The Nordson company employees who are eligible for 401(k) plans should learn how to optimize it to the maximum extent. Here is a summary of the most important information about these plans:

Summary of Discussion:

Retirees of Nordson should know that it is a retiree medical benefit account that is established within a defined benefit pension plan to pay benefits for illness, accident, and hospitalization for retired employees, their spouses, and their dependents. It is essential to comprehend that Sections 401(h)(1)-(6) of the Internal Revenue Code must be met in order for payments to be made.

Education

Internal Revenue Code section 213(d) defines medical expense as amounts paid for medical care (1). This includes costs related to:
I. Transportation mainly for and necessary to medical care, qualified long term care services or insurance (including Medicare Part B premiums and qualified long term care insurance premiums).

It is important for retired Nordson employees to know that the language of the plan document determines the schedule of distributions, the scope of coverage, and who is eligible for the plan. A 401(h) account cannot have discrimination in coverage, contribution, and benefit in favor of officers, shareholders, supervisory employees, or highly compensated employees. A 401(h) contribution is not permitted to exceed the total cost of providing the benefits, which must be amortized over the duration of prospective service.

In compliance with Section 1.401-14(c) of Treasury Regulation 1.401, a qualified 401(h) account must provide:
Pension benefits must take precedence over retiree medical benefits. The 401(h) medical benefits of the retirees must be placed in a separate account in the pension trust.

Except for key personnel, the account for the benefits of the employee, or the employee’s spouse or dependents, must be held in a separate account. Furthermore, this account can only be used to pay for the employee’s medical benefits. The contributions from the employer to the account must be reasonable and quantifiable.

Contributions to 401(h) accounts made during or after the tax year must be used to pay for medical plan benefits. These contributions are non-transferable and cannot be used for any other purpose. Furthermore, the plan must provide that any balance remaining in the 401(h) account must be reversed to the employer at the time of liquidation of the plan’s obligations for the retiree medical benefits.

Nordson retirees should be aware that the subordination requirement is incomplete until the plan demonstrates that the total contributions for retiree medical benefits do not exceed 25 percent of total contributions. The 25% includes the actual contribution to the life insurance part of the plan (but excludes the contribution to fund past service credits).

This restriction is meant to ensure that medical contributions are subordinate to pension contributions. It is also important for Nordson retirees to know that plan sponsors with overfunded, terminating defined benefit plans are allowed to make tax-free contributions (known as) to the related 401(h) accounts. Furthermore, there are restrictions that need to be taken into account, namely the amount transferred is not considered as a taxable reversion. The provision expires on December 31, 2025, or the asset transfer occasioned by December 31, 2025.

The Positives of 401(h) Plans

Deductible:

Employers can claim deduction on their tax returns up to a certain limit. There is no provision for the arrangement to be made for contributions that are beyond the total benefits cost.
Benefit is tax-free for retirees.

The funds are taxed on the way out, and the distributions are tax-free if they are made for the purposes of medical expenses.
The amount that can be contributed annually to the plan by employers is not restricted and can be anything from zero to 25%. They are not required to contribute, but they have the option to do so.

Nordson employees who are interested in the possibility of maximizing their retirement benefits may be interested in knowing that contributions made to 401(h) accounts can be used to pay for qualified medical expenses that include spouses and children, and dependents. This enables retirees to go beyond the healthcare needs of the 401(h) plan and use the funds to support the medical costs of their relatives and friends. As we explained above, 401(h) plans are tax-compliant and flexible, and when used correctly, they can help retirees design a sound healthcare strategy that includes their families.

The Drawbacks to 401(h) Accounts

The plan itself is complicated and comes with expensive setup and management fees. Because it is not an IRS-approved plan, it operates with more time, administration, and supervision needed.
Employers have to keep the account open until all the retirees have used up their medical account benefits.
Actuaries are often needed to manage and supervise the account, but they can be hard to find.

The conclusion of the Pharmaceutical and Biotechnology Association (BPIA) indicated that its members raised the prices of arthritis and cancer medicines and other prescriptions by 5.6% at the beginning of this year. This means that a Nordson retiree with a 401(k) may be in a better position (h). Furthermore, a large number of pension plan sponsors may be inclined to fund retiree medical costs through 401(h) accounts. Nordson employees who are considering this plan are entitled to employer and/or employee contributions, as well as transfers of excess pension benefits, if permitted by the plan terms.

The contributions are deductible, the earnings are taxed on the accrual basis, and the withdrawals are tax-free for 401(h) accounts. Those Nordson retirees who are not very sure how their 401(h) works may benefit from seeking professional financial advice. We at The Retirement Group will help you get a free cash flow analysis and talk to a consultant who will help you identify which decision is most appropriate for you.

Anybody, whether male or female, can be compared to a chef in the kitchen. The chef has the responsibility of preparing meals for his guests and therefore has to make sure that everyone gets the food that they want. The chef also knows that the enjoyment of the meal is not only limited to the consumer’s plate but also the company’s plate as well. In this analogy, the chef represents the Nordson employees who are about to retire while the meal represents their retirement benefits. Just as the chef takes into account the diverse tastes and preferences of the guests, Nordson employees must consider the overall needs of their retirement.

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Like a buffet, the 401(h) plan is a menu of choices that can help the financial health of the employee and his or her dependents. With each course as a different aspect of their retirement plan, from pension benefits to medical expenses, the chef prepares the meal to ensure everyone gets something out of it. In the same manner, Nordson employees can choose the various components of the 401(h) plan to develop a full retirement plan that will benefit not only their financial situation but also that of their families. In the same manner that the chef’s attention to detail will improve the overall experience of the meal, the proper application of a 401(h) plan can positively affect the career of a Nordson employee and his or her family

Sources:

1. Health Affairs. 'Health Insurance Premiums: Average Family Premium Hits $23,968 in 2023.' Health Affairs , 2023, healthaffairs.org/doi/10.1377/hlthaff.2023.00996 .

2. MissionSquare Retirement. '401(h) Retiree Health Account.' MissionSquare Retirement , missionsq.org/products-and-services/401%28h%29-retiree-health-accounts.html .

3. Groom Law Group. 'IRS Rules that Payment of 401(h) Account Benefits to Pension-Eligible Active Participants Won't Jeopardize Plan Qualification.' Groom Law Group , 2023, groom.com/resources/irs-rules-that-payment-of-401h-account-benefits-to-pension-eligible-active-participants-wont-jeopardize-plan-qualification .

4. American Society of Pension Professionals & Actuaries. 'Retiree Health Accounts Under Section 401(h).' ASPPA , 2019, asppa-net.org/news/2019/4/retiree-health-accounts-under-section-401h .

5. Emparion. 'Pros and Cons of 401(h) Accounts Plans.' Emparion , 2023, emparion.com/pros-and-cons-of-401h-accounts-plans .

How does the Nordson Corporation Salaried Employees Pension Plan calculate an employee's Accrued Benefit, and what factors need to be considered to ensure accurate pension benefits at retirement? Understanding the components that contribute to the calculation is crucial for employees planning their retirement through Nordson Corporation.

Accrued Benefit Calculation: Nordson Corporation calculates an employee’s Accrued Benefit based on the Final Average Monthly Pay, the number of Years of Benefit Service, and an estimate of the employee’s Social Security benefit. The formula used includes a reduction if an employee has less than 30 Years of Benefit Service(Nordson Corporation_Feb…).

What are the eligibility criteria for joining the Nordson Corporation Salaried Employees Pension Plan, and how can employees determine their vesting status as they approach retirement? It is essential for employees to be aware of the timelines and requirements necessary to fully benefit from the retirement plan offered by Nordson Corporation.

Eligibility Criteria: Employees become eligible for the Nordson Corporation Salaried Employees Pension Plan after completing a Year of Eligibility Service, which requires at least 1,000 hours of work annually. Vesting occurs after completing 5 Years of Vesting Service, ensuring full entitlement to benefits(Nordson Corporation_Feb…).

In what ways can employees at Nordson Corporation access information about their pension plan benefits, and what steps should they follow if they believe their claims for benefits were denied? Knowing the appropriate channels for receiving information can help employees navigate any discrepancies with their pension benefits.

Accessing Pension Information and Claiming: Employees can access their pension plan details through John Hancock’s website or phone service. If a benefit claim is denied, employees can follow the claims procedure outlined by Nordson, which includes submitting a written request and appealing decisions(Nordson Corporation_Feb…).

What options does Nordson Corporation provide for early retirement, and how can employees assess whether an early retirement is financially feasible for them? Understanding the implications of early retirement can significantly impact an employee's long-term financial security.

Early Retirement Options: Nordson Corporation offers early retirement options starting at age 55, with at least 5 years of vesting service. Benefits are reduced by 6% per year for each year that early retirement is taken before the Normal Retirement Date(Nordson Corporation_Feb…).

How does Nordson Corporation's pension plan ensure that employees receive monthly benefits post-retirement, and what are the different forms of payment available to retirees? Grasping the payment structures may help employees make informed decisions regarding their retirement income.

Monthly Benefit Payments: Employees retiring from Nordson Corporation can choose various payment methods, including a Life Annuity or a 50% Joint & Survivor Annuity for married participants. Payments start after the Normal Retirement Date or early retirement, depending on the selected option(Nordson Corporation_Feb…).

What rights do participants have under the Employee Retirement Income Security Act (ERISA) concerning their Nordson Corporation pension plan, and what should they do to enforce these rights effectively? Employees should be aware of their rights to protect themselves during the benefit claiming process.

ERISA Rights: Under ERISA, participants have the right to receive information about their benefits, file claims, and sue if benefits are denied. Plan fiduciaries must act in the best interest of employees, and participants are protected from retaliation for asserting their rights(Nordson Corporation_Feb…).

How does the termination or amendment of the Nordson Corporation Salaried Employees Pension Plan affect employees' accrued benefits, and what protections are in place? Awareness of these scenarios can help employees better plan their financial futures in relation to their pensions.

Plan Termination or Amendment: If the plan is terminated or amended, accrued benefits cannot be reduced, and employees’ benefits become 100% vested. This ensures that employees retain the benefits they have earned up to the point of the change(Nordson Corporation_Feb…).

In what situations might employees at Nordson Corporation lose their pension benefits, and what preventative actions can they take to ensure they remain eligible for these benefits? Understanding the risks involved in pension plans can aid employees in maintaining their retirement security.

Loss of Pension Benefits: Employees may lose pension benefits if they leave Nordson Corporation before vesting or fail to select appropriate survivor options. Keeping the Plan Administrator informed of current contact information is crucial to avoid losing benefits(Nordson Corporation_Feb…).

How can employees at Nordson Corporation address questions or concerns related to their retirement planning, and what resources are available for personalized assistance? Access to proper resources is vital for employees needing guidance throughout their retirement journey.

Retirement Planning Resources: Employees can contact the Plan Administrator or use John Hancock’s automated services to address questions about retirement planning. Personalized assistance is available for any specific pension-related inquiries(Nordson Corporation_Feb…).

What steps should employees take to contact Nordson Corporation or the Plan Administrator to get detailed information about their pension plan, and what should they include in their inquiries to ensure a comprehensive response? Effective communication techniques can significantly enhance employees' understanding of their benefits. These questions have been designed to help employees of Nordson Corporation navigate their pension plan and retirement effectively.

Contacting the Plan Administrator: Employees can contact Nordson Corporation or the Plan Administrator by calling the number listed in the Summary Plan Description. It’s advisable to provide detailed questions regarding benefit amounts, vesting status, or payment options to receive a thorough response(Nordson Corporation_Feb…).

With the current political climate we are in it is important to keep up with current news and remain knowledgeable about your benefits.

Pension Plan Name: Nordson Corporation Retirement Plan Qualification Criteria: Years of Service: Generally requires a minimum of 5 years. Age Qualification: Typically eligible at age 65. Pension Formula: Formula is based on a percentage of final average salary and years of service. 401(k) Plan Name: Nordson Corporation 401(k) Savings Plan Qualification Criteria: Employees are eligible to participate after completing 30 days of service. Company Contribution: Nordson matches employee contributions up to a certain percentage.

News: In early 2024, Nordson Corporation announced a significant restructuring plan, including a reduction of approximately 5% of its global workforce. This move was part of a broader strategy to streamline operations and improve overall efficiency. The company also updated its employee benefits package, including modifications to its pension and 401k plans. Specific changes included adjusting the company’s matching contributions and modifying pension benefit accrual rates.

Nordson Corporation (NDSN) provides stock options and RSUs to employees as part of their compensation packages. Stock options at Nordson Corporation (NDSN) are generally granted to senior executives and key employees based on performance and tenure. RSUs are also awarded to employees as a form of long-term incentive, typically vesting over a period of time.

Benefits Overview: Nordson's official site provides information on various health benefits including medical, dental, and vision insurance plans. Employees have access to comprehensive health coverage, which typically includes options for health savings accounts (HSAs) and flexible spending accounts (FSAs). Recent Updates: The company has updated its benefits plans over the years. Specific changes for 2022, 2023, and 2024 can be found in their annual benefits summaries or employee communications.