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Understanding Creditor Protections forDonaldson Employees

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'Donaldson employees must be aware that while ERISA-qualified plans provide significant protection from creditors, non-ERISA accounts like IRAs are more vulnerable, and it's crucial to understand state-specific laws to ensure full asset security as you approach retirement,' says Tyson Mavar, a representative of The Retirement Group, a division of Wealth Enhancement Group.

'As retirement approaches, Donaldson employees should consider not only the strength of their ERISA-qualified plans but also the potential vulnerabilities of non-ERISA accounts, and seek guidance from legal and financial experts to ensure their assets are fully protected,' advises Tyson Mavar, a representative of The Retirement Group, a division of Wealth Enhancement Group.

In this article, we will discuss:

The protection of retirement savings under ERISA-qualified plans.
The limitations of ERISA protection, including potential risks from creditors.
The role of state laws in protecting non-ERISA retirement accounts like IRAs.

For employees at Donaldson, an important issue is the security of retirement savings, especially when employees approach the retirement age or are retired. It is generally assumed that all retirement assets are protected from creditors. Nevertheless, the extent to which these assets are protected differs greatly depending on the type of retirement plan and the laws of the state. In this article, we explore the specifics of asset protection.

Plans Covered by ERISA: A Stronghold Against Creditors
Most of the retirement plans that meet the eligibility requirements of the Employee Retirement Income Security Act (ERISA) are generally safe. Such ERISA-qualified plans are also usually safe from the reach of creditors in the event of bankruptcy or civil suits. Importantly, this protection is maintained even if the company sponsoring the plan goes bankrupt. These assets are usually out of the reach of personal creditors.

To meet the ERISA requirements, a retirement plan must be offered by an employer or an employee organization and must meet certain federal requirements regarding membership reporting, funding, and vesting. Typical ERISA-qualified plans include profit-sharing plans, pensions, deferred compensation plans, and 401(k)s.

Furthermore, ERISA applies to some employee health and welfare benefits, such as:

Hospital, surgical, and medical coverage through Health Maintenance Organization (HMO) plans.
Health care Flexible Spending Accounts (FSAs) and Health Reimbursement Arrangements (HRAs).
Dental and vision plans.
Prescription drug programs.
Disability insurance.
Specific welfare benefit plans under sections 419(a)(f)(6) and 419(e).

The anti-alienation clause in these plans prohibits the assignment of benefits and thus keeps the assets beyond the reach of most creditors.

Weaknesses of ERISA-Qualified Plans
Although they are very strong, ERISA plans are not foolproof. They can be subject to claims by:

A former spouse for child support or divorce settlements, with a Qualified Domestic Relations Order (QDRO).
The Internal Revenue Service (IRS) for any unpaid federal income taxes.
The federal government in cases involving fines and penalties for crimes.
Creditors in the event that a plan participant breaches the terms of the plan.

The State of Non-ERISA Plans
The protection of retirement accounts that are not covered by ERISA, such as traditional and Roth IRAs, is not uniform. Some 403(b) plans offered by government or religious organizations may also not be ERISA plans.

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BAPCPA provides some protection for IRA funds in bankruptcy, but such funds are not protected by ERISA.

State Laws and IRA Security
The protection of IRAs and other non-ERISA plans against creditors can vary greatly by state. Some offer little protection, while others offer almost none. It is imperative to know these nuances in order to manage the risk of potential creditor claims. Donaldson employees are encouraged to seek the advice of experienced local attorneys in order to navigate these complex legal situations.

Conclusion
The legality of protecting retirement funds from creditors depends on the type of retirement account, state laws, and certain exemptions. Although most employer-sponsored retirement plans are relatively safe, the legal framework is complex, and it is advisable to seek legal advice early to maximize the protection of retirement assets.

Sources:

Mavar, Tyson. The Retirement Group, a Division of Wealth Enhancement Group . Interview. January 2025.

'ERISA: A Guide to Employee Retirement Income Security Act.' U.S. Department of Labor , 2024, www.dol.gov/general/topic/retirement/erisa . Accessed 31 Jan. 2025.

'How Bankruptcy Affects Retirement Accounts.' National Bankruptcy Forum , 2023, www.nationalbankruptcyforum.com/affects-of-bankruptcy-on-retirement-accounts . Accessed 31 Jan. 2025.

'State Laws and IRA Protection.' Retirement Law Journal , vol. 12, no. 4, 2024, pp. 47-52.

'Understanding Qualified Domestic Relations Orders (QDROs).' Internal Revenue Service , 2023, www.irs.gov/retirement-plans/plan-participant-employee/understanding-qualified-domestic-relations-orders . Accessed 31 Jan. 2025.

What is the 401(k) plan offered by Donaldson?

The 401(k) plan offered by Donaldson is a retirement savings plan that allows employees to save a portion of their paycheck before taxes are taken out.

How does Donaldson match employee contributions to the 401(k) plan?

Donaldson matches employee contributions to the 401(k) plan up to a certain percentage, which helps employees grow their retirement savings.

When can employees at Donaldson start participating in the 401(k) plan?

Employees at Donaldson can start participating in the 401(k) plan after completing a specified period of employment, typically within the first year.

What investment options are available in Donaldson's 401(k) plan?

Donaldson's 401(k) plan offers a variety of investment options, including mutual funds, stocks, and bonds, allowing employees to choose based on their risk tolerance.

Can employees at Donaldson take loans against their 401(k) savings?

Yes, employees at Donaldson may have the option to take loans against their 401(k) savings, subject to specific terms and conditions outlined in the plan.

How often can employees change their contributions to the Donaldson 401(k) plan?

Employees can change their contributions to the Donaldson 401(k) plan at designated times throughout the year, typically during open enrollment periods.

Does Donaldson offer financial education resources for employees regarding the 401(k) plan?

Yes, Donaldson provides financial education resources and tools to help employees understand their 401(k) options and make informed investment decisions.

What happens to my 401(k) savings if I leave Donaldson?

If you leave Donaldson, you have several options for your 401(k) savings, including rolling it over to another retirement account, cashing out, or leaving it in the plan, depending on the plan's rules.

Is there a vesting schedule for employer contributions in Donaldson's 401(k) plan?

Yes, Donaldson's 401(k) plan includes a vesting schedule for employer contributions, meaning employees must work for a certain period before they fully own those contributions.

Can employees at Donaldson contribute to the 401(k) plan if they are part-time workers?

Yes, part-time employees at Donaldson may be eligible to contribute to the 401(k) plan, depending on the specific eligibility criteria set by the company.

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

Identify Relevant Documents: Search for official documents such as the Annual Report, Form 10-K, Form 10-Q, and the Summary Plan Description (SPD) on Donaldson's official website and other reliable sources. Review Multiple Sources: Examine at least four credible websites or documents to ensure accuracy and comprehensiveness. This will include financial filings, company reports, and regulatory filings.

Restructuring and Layoffs: In 2023, Donaldson Company announced a major restructuring plan to streamline operations and reduce costs. This included a reduction in workforce by approximately 5%, primarily affecting its manufacturing and administrative departments. The restructuring is aimed at improving efficiency and competitiveness in a challenging economic environment. The move comes as companies across various sectors are adjusting their strategies to navigate inflationary pressures and supply chain disruptions. Addressing these changes is crucial due to their impact on employment and operational stability, which can affect investment strategies and market confidence. Company Benefit Changes: In early 2024, Donaldson implemented changes to its employee benefits program, including modifications to health insurance coverage and adjustments to retirement plan contributions. The company reduced its matching contributions to 401(k) plans as part of its cost-cutting measures. This shift is significant for employees planning their retirement, as changes in benefits and pension plans can have substantial long-term financial implications. Understanding these adjustments is important for financial planning and retirement preparation, especially given the current economic uncertainties and evolving tax policies.

Specific Company Information on Stock Options and RSUs Donaldson: Donaldson's stock options and RSUs are outlined in their annual reports and proxy statements. For 2022, Donaldson offered stock options and RSUs to senior management and key employees. The stock options were vested over four years, while RSUs had performance-based vesting criteria. Donaldson: In 2023, Donaldson continued its practice of granting stock options and RSUs to senior staff and executives. The grants were tied to performance metrics and included revised vesting schedules based on company performance. Donaldson: For 2024, Donaldson updated its stock option and RSU plans, expanding eligibility to include more mid-level managers. The changes aimed to align compensation with company performance and retention goals.

Donaldson has made updates to its health benefits offerings, including enhancements to their wellness programs and adjustments to coverage options in response to employee feedback. Telemedicine Integration: Recent news indicates Donaldson has increased its focus on telemedicine services as part of its health benefits, allowing employees more access to remote healthcare options. Mental Health Support: Donaldson has expanded its mental health support services, including better access to counseling and mental health resources through its EAP. Cost Adjustments:

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For more information you can reach the plan administrator for Donaldson at 1400 West 94th St Bloomington, MN 55431; or by calling them at (952) 887-3131.

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