Test “PATTERNS”: What Makes a Reasonable Fee Reasonable?
Posted by Janet Thomerson, CPA, RPA
There are many fees related to maintaining a plan, and any fees paid by the plan are required to be "reasonable" plan expenses. What exactly does this mean? Who determines what is reasonable for each specific plan? Here is a two part test that will help plan sponsors determine whether the fees associated with operating their plan are reasonable or not.
http://www.plansponsor.com/MagazineArticle.aspx?id=6442480582&magazine=6442480712
IRS Handout on EPCRS: Plan Correction Issues Presentation
Posted by Janet Thomerson, CPA, RPA
The IRS held a webcast regarding their correction plan, Employee Plans Compliance Resolution System ("EPCRS"). They have provided a pdf of their powerpoint presentation that could be very helpful in correcting many plan operation failures that seem to be common among plan sponsors. This pdf, used in conjunction with IRS Revenue Procedure 2008-50, can provide all the tools necessary to correct plans.
http://www.irs.gov/pub/irs-tege/epcrs_phoneforum_correction.pdf
Six Ways to Limit Your Chances of a Visit from the DOL
Posted by Janet Thomerson, CPA, RPA
Being notified of a pending "investigation" regarding the 401(k) plan that your company sponsors is never a good day. The Department of Labor has been increasing its focus on enforcement with the recent addition of a couple thousand more investigators. There are some very simple steps that you can take to limit your chances of one of these investigations. Click on the link below to find out.
http://www.wnj.com/Publications/Six-Ways-to-Limit-Your-Chances-of-a-Visit-from-the
IRS Audits Will Focus on High-Income, High-Wealth Taxpayers, SB/SE Official Says
Posted by Calvin Hedman, CPA, CM&AA
The Internal Revenue Service's examination team will focus on high-income, high-wealth taxpayers, paying close attention to those with a tax liability that is significantly reduced through the use of multiple entities, an official said Sept. 15.
The agency is paying attention to individuals with an income level that is not “huge,” but has wealth and a lower tax liability because of flow-throughs, trusts, and other similar entities, said Linda Franke, a senior level adviser with the Small Business/Self Employed Division, at an American Law Institute-American Bar Association tax controversy conference.
IRS will focus on individuals with an income of $250,000 or more and total positive income of at least $1 million, she said. This process will mostly be done corporately with field offices doing the examinations, supplemented by office examinations, Franke said.
IRS also is interested in bringing nonfilers into compliance, so it will pay close attention to taxpayers with multiple years of nonfiling.
Source: The Bureau of National Affairs, Inc.
Budgeting for 2012 Workers Compensation Costs
Posted by Calvin Hedman, CPA, CM&AA
On August 22, 2011, the Workers’ Compensation Insurance Rating Bureau of California (WCIRB) proposed new pure premium rates for businesses that renew their workers’ compensation insurance starting January 1, 2012.
Because most admitted carriers in California end up adopting the pure premium rates the Commissioner approves, it is important to consider how these proposed rates could affect the price policyholders pay for coverage. So, we've compared last year’s approved pure premium rates (effective for January 1, 2011) to the rates proposed for January 1, 2012 and found the following:
· Out of the 490+ standard classifications, there are no rates proposed to DECREASE
· Rates for 481 classifications are proposed to INCREASE by more than 10%
· Rates for 353 classifications are proposed to INCREASE by more than 30%
· Rates for 80 classifications are proposed to INCREASE by more than 50%
Now is the time to advise your clients that workers compensation rate increases will occur sometime during 2012. Additionally, if the experience mod portion of the bill increases, some companies may experience 200 percent rate increases when they renew.
Since 2012 is just around the corner, it may be time for your clients or portfolio companies to consider a new risk manager especially if the services your clients are currently receiving are not commensurate with the performance you demand. We highly recommend evaluating risks renewing in Jan, Feb, or March of 2012 now as November will be difficult to beat the rush of clients trying to get their renewals completed early.
For questions, please contact Colin Baird at cbaird@sullicurt.com or at (661) 332-0382.
Source: SullivanCurtisMonroe
401(k) Plan Sponsors: Is It Time for a Fee Policy?
Posted by Janet Thomerson, CPA, RPA
As part of a plan sponsor's fiduciary duties, a written investment policy should be a standard. But what about a plan fee policy? Given the new disclosure requirements, supplementing an investment policy with a written fee policy seems like a natural course of action. For a look at some general information regarding what a written fee policy should address, read this article.
Identification of Beneficiaries on 401(k) Plan
Posted by Calvin Hedman, CPA, CM&AA
When it comes to beneficiary designations in retirement plans, many questions come up. The article below will help answer some of your questions.
Over the past few months we have received a number of inquiries about beneficiary designations in retirement plans. These inquiries are the main reason for this email.
The inquiries include issues like: Who may be a beneficiary? May I name a non-spouse? What format should be followed? Who maintains the designations?
The answers are not always straight forward, however, the most important thing to understand is that the naming of a beneficiary is the duty of the plan participant. In the event a participant does not complete a beneficiary designation, the plan itself establishes a sequence of potential beneficiaries.
One issue to keep in mind is that spouses have special standing and their share may not normally be given to another without written, knowing consent. Also it is important to keep in mind that marital status can change and the employer is not necessarily aware of all of these changes. That is why it is the responsibility of the participant to keep a current beneficiary designation with the rest of their personal papers. If a copy of a beneficiary designation is filed with the Plan Sponsor, Plan Custodian, Plan Trustee, Third Party Administrator or some other person that is merely an informative item. It is not actionable in the event of death.
Given the amount of dispute that can arise when assets are parceled out on a death, the Trustee needs to be certain that the appropriate person is paid. Most of the time the person to pay is obvious. Other times it is not. If there is doubt, the best thing to do is to wait for the court to tell the plan who should be paid.
For the convenience of you and the plan participants we are attaching a sample beneficiary designation form. This is not the only acceptable form, it is merely one that may be used to cover most of the needs of the plan participants.
As always, be sure to contact us if you have any questions.
Source: The Ryding Company
“WRONG” WAYS: 10 Things You’re (Probably Still) Doing Wrong
Posted by Janet Thomerson, CPA, RPA
Fiduciary responsibilities and the definition of a fiduciary have been a hot topic lately. The focus has been on who is and who should be considered a fiduciary. For some, there is no question that there is a fiduciary relationship. For example, plan sponsors are generally always a fiduciary. This was the topic at a recent PLANSPONSOR national conference where a panel of experts discussed the top 10 errors that many fiduciaries are making, even though there has been so much press. Take a look at this article for some great ideas for protecting your fiduciary status.
http://www.plansponsor.com/PSNC_2011_10_More_Things_Youre_Probably_Doing_Wrong.aspx
IRS Getting Better and Better at Selecting and Auditing Noncompliant Plans
Posted by Janet Thomerson, CPA, RPA
Has your plan recently received any correspondence from the Internal Revenue Service regarding your latest Form 5500 filing? New procedures implemented by the IRS have brought them success in selecting plans that may have errors. Being proactive with your plan's compliance requirements and taking advantage of the IRS corrective actions for problems when necessary are your best defense. For more information, take a look at this article.
The Delay of Fee Disclosure
Posted by Janet Thomerson, CPA, RPA
The Department of Labor announced last week that the new disclosure requirements have been delayed for a short time. What does this mean for you? What if you have already begun the process of implementing the new requirements? Here is some background on the new requirements and guidance on moving forward.
About Us
Hedman Partners is a full-service Certified Public Accounting (CPA) firm providing traditional audit, tax and consulting services to middle-market businesses, their owners and other high net worth individuals.
Recent Posts
- Test “PATTERNS”: What Makes a Reasonable Fee Reasonable?
- IRS Handout on EPCRS: Plan Correction Issues Presentation
- Six Ways to Limit Your Chances of a Visit from the DOL
- IRS Audits Will Focus on High-Income, High-Wealth Taxpayers, SB/SE Official Says
- Budgeting for 2012 Workers Compensation Costs
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